Transfer benefit

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In economics, transfer payments are a collective term for state payments to natural persons and companies, and vice versa, without the beneficiary of the transfer receiving any economic consideration at the same time . Therefore, the transfer payments from domestic financial equalization systems also count as transfer payments.

General and delimitation

A transfer - in contrast to an exchange - is understood to be a one-sided service without equivalent economic consideration. Non-monetizable consideration (such as gratitude or social recognition ) is not taken into account. In general, every payment of money, transfer of assets or goods without specific consideration can therefore be a transfer performance. Voluntary transfer payments such as gifts are just as much a part of this as forced transfers such as taxes . The state does not always have to be involved. Benefits by employers to their employees (continued wages , company pension schemes or company health care ) can be included in this, as well as benefits between natural persons (such as donations , neighborhood help ).

A transfer payment is understood more specifically to mean all monetary and real income transfers that flow from the state to non-governmental bodies or from these to the government. All corporations organized under public law ( regional authorities and social insurance funds ) are deemed to be “state” ; private households and companies are non-governmental bodies .

In the economic sense, transfer payments are social benefits paid directly by the state that are not preceded by any prior payment of contributions . It is therefore regularly important that transfer payments are unilateral and no economic consideration is made by the transfer recipient. An economic consideration is understood to mean direct and equivalent services by the transfer recipient to the transfer payer because of his transfer service. Immediately does not mean “immediately, immediately”, but in a functional connection with a transfer service; The consideration is equivalent if it roughly corresponds in value to the transfer service. Real economic considerations such as insurance benefits , which have been preceded by contributions and premium payments, do not count as transfer payments.

species

The parties involved are the transfer payer and the beneficiary of the transfer . From the perspective of the transfer recipient, there are positive and negative transfer payments. To positive transfer is when public authorities provide services to welfare recipients, while negative transfers exist when public entities require services from others. The economic conditions are important for both transfer routes. In the case of negative transfers, the ability of the taxpayer is important ; in the case of social benefits within the framework of the positive transfer, the neediness of the recipient of the benefit is decisive. While transfer payments are viewed from the perspective of the paying state, from the perspective of the recipient they are called transfer income .

In addition to monetary payments ( monetary transfers such as unemployment benefits , unemployment assistance ), goods can also be provided as so-called real transfers (allocation of social housing , educational offers , goods vouchers ). Direct transfer payments are all services that directly improve the economic situation of the transfer recipient (such as child benefit ) or the collection of direct taxes through tax law . Indirect transfers consist in particular of reducing the tax burden if the state foregoes tax revenue (as is the case with the deductibility of donations).

Instrument of redistribution

First of all, there is a primary income distribution through the participation of the economic sectors in economic life with the aim of generating income ( wages / salaries , interest income , rental income , profit ). However, this creates social injustices that are supposed to be offset by a secondary distribution of income . A secondary distribution of income takes place through transfer payments. Whether and to what extent a state is interested in a redistribution policy provides information about the prevailing economic order. A state with little or no redistribution of any kind is capitalistically oriented, while welfare states have a high proportion of secondary income distribution. Statistically, national income and transfer payments together give private income . If the transfer income is zero, the private income corresponds to the national income.

Transfer payments are not only ideally made “from rich to poor” and are also not always distributed according to need. Thus, even high-income and wealthy citizens can take advantage of child benefit , parental allowance or home ownership allowance , which is also co-financed by the “poorer” citizens. The high-income citizens are not needy, but receive state transfer payments without real redistribution.

social benefits

The idea of ​​transfer payments is based on the idea of solidarity , according to which the needy should be supported by economically stronger people. However, this is not always the case with transfer payments. In addition to monetary payments ( monetary transfers ), the state benefit can come from a tax subsidy , goods are also possible as so-called real transfers (allocation of social housing ).

An economic return service from the transfer recipient (e.g. through work for unemployment assistance ) is made later, indirectly or not at all. In the case of child benefit or BAföG , there are counter-benefits, but these are not directly economically relevant ( raising children and studying ). Only the portion of the child benefit that is not required for the tax exemption of the child allowance is a direct transfer benefit . Child allowances, on the other hand, are not part of the indirect transfers. Since child allowances are prescribed by law, their non-taxation does not constitute a state waiver.

consequences

Transfer payments lead to increased expenditure or reduced income in government budgets , which means that they are a burden on households and can lead to or increase budget deficits. From a budgetary point of view, transfer payments lead to unproductive expenditures which (initially or permanently) are not offset by any direct income or even to reduced income (in the case of tax subsidies) which (initially or permanently) do not generate any other income. The “Transfer Enquête Commission” set up by the federal government in 1977 was tasked with “ presenting all transfer effects between the state sector (local authorities and social insurance) and the private household sector ...” It came to the conclusion that “against the specific Securing individual groups of society nothing against ”. However, this only applies "provided that the associated financial burdens are borne by this group themselves and not burdened the general public". But that is exactly what happens with farmers , miners and the public service .

Germany

State transfer benefits in Germany include unemployment benefit II (colloquially Hartz IV ), social assistance , training aids (colloquially BAföG ), parental allowance , child benefit , housing benefit and, earlier, the home ownership allowance .

The (state) insurances such as unemployment , pension , health and long-term care insurance are not transfer payments, as financial compensation in the form of insurance premiums usually has to be provided. However, there are also individual elements of redistribution within insurance companies. In statutory health insurance, every insured person receives the same health service regardless of the amount of his payment, which corresponds to a transfer benefit for people with low incomes. People without an income of their own are also insured free of charge (e.g. family insurance ). The employment agency pays the health insurance contributions for recipients of unemployment benefit II . The situation is different in unemployment and statutory pension insurance, where the contributions as well as the benefits paid are proportional to income (below the income threshold ).

Non-government transfers

There are a number of transfer payments that are not centrally organized by the state. These include, for example, reduced transport costs on public transport or reduced admission prices to museums, swimming pools or cultural events. Donations in kind (e.g. at the table , clothing donations ) are non-governmental real transfers. In addition, there are privately made transfer payments based on legal regulations such as continued payment of wages in the event of illness or educational leave .

International transfer payments

International transfer payments include reparations , reparations , development aid , free deliveries of goods or military aid . In the European Union , an attempt is made to use transfer payments to level the economic gap between weaker states , regions and branches of the economy so that they are in a position to take part in competition . The World Bank , the International Monetary Fund and the United Nations also distribute transfer payments from the contributions of the net contributors . The payments by the IMF or World Bank in a rescue operation for poor or heavily indebted developing countries (see debt relief ) are only transfer payments if they are not loans. From the point of view of the creditor state or the non-state bond creditor, the debt relief turns out to be a subsequent, involuntary transfer payment.

Key figures

Social benefit rate

A key figure for measuring a sub-area of ​​state transfer payments is the social benefit ratio . It is determined by comparing the transfer benefits (social benefits) with the gross domestic product (GDP).

States with a low level of needy citizens have a low social benefit quota; if the quota is high, the state must counteract undesirable developments with a massive redistribution policy. However, a low quota can also mean that a state does not ensure a corresponding redistribution despite the need for parts of the population and vice versa.

Transfer rate

The transfer rate is a key figure that shows a municipality's burdens from transfer payments.

The transfer rate shows how high the share of “unproductive” expenditure of a municipality is in relation to total expenditure. As a rule, there are also positive economic effects associated with public spending. Municipal investment expenses (e.g. for exhibition halls), for example, later lead to income (through exhibitors and exhibition visitors). Transfer expenditure, however, has little or no positive economic effects.

Effect and criticism

Transfer payments are criticized for various reasons. This includes the assumption that transfer payments reduce the willingness of the transfer recipient to perform and can lead to a take-away mentality. The smaller the income gap between earned income and social transfer benefits, the lower the willingness to look for a job on the primary labor market . In addition, many transfer payments are not sufficiently linked to need, so that too large parts of the population can become beneficiaries.

Financial equalization

Payments by states or supranational organizations to compensate for different financial strengths (financial equalization) between states and their subdivisions (such as to federal states , cantons , states , provinces or regions ) are also a transfer payment, because these subdivisions do not have to provide anything in return.

literature

  • Hans-Georg Petersen: Finance. Foundation, budget, tasks and expenses, general taxation . 3. revised u. extended Edition. tape 1 . Kohlhammer, Stuttgart / Berlin / Cologne 1993, ISBN 978-3-17-012638-1 .

Individual evidence

  1. Susanne Hartnick, control problems in donation organizations , 2007, p. 21 (with further evidence)
  2. Transfer Enquête Commission, in: Federal Ministry for Labor and Social Order, The Transfer System in the FRG , 1979, pp. 13 and 22.
  3. a b Dieter Martiny, Unterhaltsrang und -rückgriff , 2000, p. 92.
  4. Dirk Piekenbrock, Gabler Kompaktlexikon Volkswirtschaftslehre , 2013, p. 410.
  5. ^ Pension insurance before bankruptcy , DER SPIEGEL No. 8/1983 of February 21, 1983, p. 80 ff.
  6. ^ Alfred Bezler, Kommunale Kostenrechnung , 2014, p. 154.
  7. Michael Opielka, Basic Income and Value Orientations: an empirical analysis , 2009, p. 66.
  8. Volker Beeck, Fundamentals of Taxation , 2007, p. 4