{"title":"Skimming the achieved? Quantifying the fiscal incentives of the German fiscal equalization scheme and its reforms since 1970","authors":"Yannick Bury, Lars P. Feld, Heiko T. Burret","doi":"10.1007/s10101-024-00316-w","DOIUrl":null,"url":null,"abstract":"<p>Marginal rates of contribution (MRC), i.e., the rates at which additional revenues are skimmed via larger contributions or lower transfer receipts, quantify the incentives of a fiscal equalization scheme. This paper is the first to calculate marginal rates of contribution for the Laender (states) in the German fiscal equalization scheme for each of the 51 years since its establishment in 1970 and over five major reforms, taking into account all relevant revenues. Our results show that MRC have been at a consistently high level. Until 2019 the scheme induced an almost full skimming of additional tax revenues of recipient states. With the system’s latest reform in 2020, MRC increased further. Recipient states now face an over-skimming of additional tax revenues and, thus, massive fiscal disincentives to maintain their own tax base. While these findings have been widely expected, comprehensive evidence has been missing so far.</p>","PeriodicalId":46302,"journal":{"name":"Economics of Governance","volume":"24 1","pages":""},"PeriodicalIF":1.2000,"publicationDate":"2024-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economics of Governance","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s10101-024-00316-w","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
Marginal rates of contribution (MRC), i.e., the rates at which additional revenues are skimmed via larger contributions or lower transfer receipts, quantify the incentives of a fiscal equalization scheme. This paper is the first to calculate marginal rates of contribution for the Laender (states) in the German fiscal equalization scheme for each of the 51 years since its establishment in 1970 and over five major reforms, taking into account all relevant revenues. Our results show that MRC have been at a consistently high level. Until 2019 the scheme induced an almost full skimming of additional tax revenues of recipient states. With the system’s latest reform in 2020, MRC increased further. Recipient states now face an over-skimming of additional tax revenues and, thus, massive fiscal disincentives to maintain their own tax base. While these findings have been widely expected, comprehensive evidence has been missing so far.
期刊介绍：
Economics of Governance aims to foster research on governance at many levels: corporations, non-profit organizations, local and federal governments, and international organizations. Applications include the internal organization of firms, corporate governance, the private provision of public goods, local public policies, relations across levels of government, public expenditure and regulation, and problems of credibility and enforcement of international agreements. Though the journal aims to contribute to general economic knowledge, it is also interested in applying theoretical and empirical insights to important current topics. The journal is open to many approaches, including formal theoretical analysis, systematic observation, simulation, and empirical studies. Interdisciplinary contributions by economists, organizational scholars, and political scientists are encouraged.
Officially cited as: Econ Gov
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