Dual Income Tax: Supporting Arguments and Design – An Overview

Part of the ZEW Economic Studies book series (ZEW, volume 39)


In November 2005, Germany’s major political parties, the CDU, CSU and SPD issued a coalition statement, setting out the guidelines for the Federal Government’s policy under Chancellor Merkel. On ‘reforming business taxes’, this statement reads as follows:

Germany must be able to hold its own in competing internationally on tax into the future. In this legislature period, until 01.01.2008, we will, therefore, continue to develop business tax laws thoroughly, implementing tax rates that are competitive internationally. As well as corporations, these reforms must also include transparent entities, as these account for more than 80% of all German businesses. In particular, we will be guided by the following aims:

• Making Germany more competitive internationally and viable within Europe

• Improving neutrality in terms of legal form and financial decisions as far as possible

• Limiting the room for creative accounting

• Improving planning certainty for businesses and the public budgets

• Safeguarding Germany's tax base in the long term.

We will make a basic decision between comprehensive and dual income taxation. In this legislative period, we will reform the taxation of capital gains and private profits on disposals (Coalition agreement, 2005).


Capital Income Capital Gain Equity Capital Sole Trader Return Allowance 
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Copyright information

© Physica-Verlag Heidelberg New York 2008

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