Added value tax

A value added tax is a tax or levy that is linked to the value added in a company and would be levied instead of the current social security contributions.

Goal setting

The social security contributions , including the share to be paid by the employer, are levied (in Germany) as a percentage of the gross wage (limited by the income threshold). This calculation basis, however, unilaterally burdens the production factor labor when financing social security and therefore tends to make it more difficult to create new jobs. With a value added tax, the assessment basis for social security contributions is to be broadened and capital income is to be used to finance social insurance.

The value added tax has similarities to the value-added tax , which also uses the value as the tax base. However, the value added tax is being discussed as an alternative to the trade tax .

calculation

In order to load the factors according to their contribution to the value creation of the company, it was proposed to take the value creation of a company as a basis of assessment. The value added of a company is understood as the increase in the value of the end product over the values of the output products achieved through the company's activities.

The calculation can be done additively or subtractively. The simplest method is the subtractive method. In this case, the sum of the intermediate services in question that are obtained from the market are deducted from the company's turnover (hence the difference method). The remaining amount is the gross value added of the business.

Added value tax in politics

In Germany, it was first brought up for discussion by Labor Minister Ehrenberg in the social-liberal coalition at the end of the 1970s. This approach, an alternative assessment basis for social security contributions, was called “machine tax” or “machine contribution”. The concept of citizens' insurance , which the SPD, the Greens and the Left Party have long been calling for, is based on the principle of value added tax with a broad assessment basis, which includes other types of income and not just wages and salaries. The requirement to include all residents in the citizens' insurance is to be seen independently of this.

In Austria, the value added tax was proposed in the 1980s by the then Minister of Social Affairs, Alfred Dallinger . It was intended to compensate for the social security losses associated with the increasing shift from labor-intensive production to automation . The SPÖ Chancellor Christian Kern also advocated the introduction of a value added tax in 2016.

Theories

Since the value added tax includes the factor capital in the assessment of social security contributions, it is more heavily affected by taxes than without a value added tax. This leads to a reduction in capital formation and therefore in the future also to a dampening of the demand for labor. The question is whether the balance of the short-term increase in labor demand due to the resulting reduction in non-wage labor costs and the long-term reduction in labor demand due to a dampening in the build-up of the capital stock are positive or negative. In model calculations with the Bonn Model 11, Krelle et al. Came to the conclusion that the long-term decline in labor demand outweighs the short-term expansion due to the cost reduction.

In view of the long-term nature of the assumed forecast horizon (10 years and more), however, the question arises whether the forecast job losses are not within the scope of statistical uncertainty, i.e. possibly just as well due to the inherent measurement errors in capital stock and other economic indicators.

Scientific evaluation

In a study commissioned by the Chamber of Labor in 1997, the Austrian Institute for Economic Research pointed out that the introduction of the value added tax was essentially income-neutral, since in return the ancillary wage costs could be reduced accordingly. This would reduce the cost of labor, but would be offset by an increase in the cost of capital. Capital-intensive industries such as B. Finance and the energy industry would be more stressed, while z. B. the trade could benefit from the changeover. The self-employed would also be burdened, as in the future they would have to pay a tax for their own work, which would primarily disadvantage farmers and one-man businesses. In general, the introduction of the value added tax would have positive effects on employment but negative effects on the use of capital:

“The most serious disadvantage of introducing a value added tax is that it slows down technical progress in the long term by increasing the cost of capital and thus has an unfavorable effect on productivity, real wages and investment activity. From a static point of view, the changeover only changes the tax burden on the industries; from a dynamic point of view, however, the process of capital intensification and the implementation of technical innovations tends to be slowed down. The stimulation of employment by lowering non-wage labor costs is offset by a slowdown in the progress of productivity and real wages. "

literature

Manfred Bauer: Value Added Tax - Language Monument or Political Project with a Future? Self-published, Vienna 2004.

Harald Schmadlbauer: Value added tax: a useful addition or alternative to financing social security? ( Online ; PDF; 1.4 MB)

W. Krelle, D. Elixmann, H. Jörg, H. Kreuer, H. Sarazin: The "machine contribution". Macroeconomic effects of alternative assessment bases for employers' social security contributions. Mohr, Tübingen 1985.

Web links

Georgii: Expert opinion on the constitutional admissibility of a value added tax and its economic effect (PDF file; 74 kB)

Individual evidence

↑ Wolfgang Gehrmann: Robots as retirement savers? In: The time . November 21, 2012, ISSN 0044-2070 ( zeit.de [accessed October 30, 2017]).

↑ Timot Szent-Ivanyi: Bundestag election: SPD, Greens and Left continue to campaign for citizens' insurance . In: Berliner Zeitung . ( berliner-zeitung.de [accessed October 30, 2017]).

↑ michael.bachner: Kern converts "machine tax " into "employment bonus" . ( kurier.at [accessed October 30, 2017]).

↑ W. Krelle, D. Elixmann, H. Jörg, H. Kreuer, H. Sarazin: The "machine contribution". Macroeconomic effects of alternative assessment bases for employers' social security contributions. Mohr, Tübingen 1985.

↑ Breuss F./Schebeck F./Walterskirchen E .: value added tax as an alternative to wage-related employer contributions to the family compensation fund WIFO-Monthly Report 9/1997

[1] Wolfgang Gehrmann: Robots as retirement savers? In: The time . November 21, 2012, ISSN 0044-2070 ( zeit.de [accessed October 30, 2017]).

[2] Timot Szent-Ivanyi: Bundestag election: SPD, Greens and Left continue to campaign for citizens' insurance . In: Berliner Zeitung . ( berliner-zeitung.de [accessed October 30, 2017]).