Tax cuts: feel-good package for the private jet group

The economy threatens to topple - and our economic gurus demand: Soli away, corporate taxes down! Hardly anything should be ineffective to prevent a recession.



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When it comes to doing away with solos, almost every argument in this country seems somehow good. When the economy seemed to grow endlessly, it was said that people should finally reap the rewards - that is, abolish the solidarity surcharge. Now threatens the crash of the economy and fruits - and? Clear: abolish solos. Because that helps against the impending recession. This still has room for improvement regarding the logical stringency of the argumentation. No matter.

The question is rather whether it helps against the actual impending downturn to abolish the solos, and not only partially, as already announced, but whole.

And best of all the taxes for companies to reduce it quickly - second major demand that has been booming for days from business associations and Christian-Merz-and-Friedrich-Lindner circles and by orthodox economists such as the Freiburg Lars field is classified as very urgent. Because Germany threatens to fall internationally terrible on the worst places, as far as the tax rates. And that is "increasingly endangering existence" (BDI President Dieter Kempf) for our poor economy. And such a tax reform would help against "economic clouding", as DIHK President Eric Schweitzer reported at the turn of the year.

Really? It is quite possible that the economy would help everything - least of all to abolish the soli and reduce corporate taxes. As strange as that may sound. And as nice as it is natural for every person concerned to pay less taxes; Even rich people need something to be happy about.

Only a state budget is not a feel-good box for association people, villa owners and the joy of orthodox economy. In real life, tax cuts do not fall from the sky. Either debt has to be made for it again - or money is missing elsewhere. Both no manslaughter argument, of course. But then things have to be worthwhile, the relief also has an economic effect - and other ways of spending money are really less important and promising.

If the solos fall away, it is above all wealth that benefits

In order to stabilize a tipping economy, tax cuts would have to work so that people spend a lot more money - so that despite the downturn, the economy still has enough to do and companies do not have to lay off employees. In the case of the solos rather unlikely: about half of the Germans paid thanks to allowances and the like anyway - the supplement is for a single without children only gross annual 16,000 euros a year, in a family with two children even at 60,000 euros, like The Berlin tax expert Stefan Bach of the German Institute for Economic Research (DIW) pre-calculates.

In other words, only one half of Germans would feel something of the abolition anyway. What's even stupid: More than half of the soli revenue so far pay the top ten percent of the rich in the country, which in turn spend money only a small part of additional Zasters at all, so give it back to the economic cycle in a discharge , Even if Hildegard is sure to find a nice soli-chain around. The rest migrates to the high edge and is not spent. This will not help much those who, for example in the auto industry, are threatening to lose their jobs if the economy does not regrow soon (and people buy cars).

So lowering a tax is not much more efficient in the fight against a macroeconomic downturn than, say, shooting the money at the opposite side of the moon.

Now, of course, could be that the Soli-degradation by other means, but still acts as an "investment program", as the Economic Council of the Union times just cocky round the round - because some companies also pay solos and would benefit from the reduction. Especially if for all others also the corporation tax sink. Dream of all bosses.

Again, the appearance could be deceiving. Although taxes for companies in countries such as the United States, Great Britain, France, Belgium or Italy have already been lowered in some cases - or will be soon. And it may be that one or the other boss will try to relocate one or the other profit abroad, instead of investing the money with us. Tax competition.

In fact, after all this experience in reality is rather rare. The tax rates are relatively unimportant - unlike the lobby lament. "If domestic companies see sales, they will also invest there," says David Milleker, chief economist at Union Investment.

Where was the investment boom when profits increased?

If it were so crucial what companies profit from after taxes, there would have had to be an incredible investment boom in Germany in recent years. After all, the economy has never made as much profit as in previous years. Nevertheless, less was invested than in earlier upswings. It only became slightly more popular in 2017, when the economy briefly became more buoyant domestically; since it has global crisis, the investment appetite has also dwindled again. This has only very limited to do with tax rates something.

If companies do not invest despite the flood of money, it's risky to just assume that they would do so if they got even more thanks to tax gifts. This simply does not make much sense economically. Which in turn makes the nagging seem absurd, according to which, because of the international tax competition, there is no other way than to reduce taxes here as well. Supposedly Donald Trump drives the German site into ruin because he has lowered the tax rates in the US so drastically.

If so, there would have been historic investment waves in the US since the trillions of tax donations a year ago. And? Nothing.

"Since Trump's reform of corporate taxation, investment momentum in the US has even slowed," says Paris economic expert VĂ©ronique Riches-Flores. Worse yet, the company bosses bought Trump's own money and most of all their own shares, which for months reinforced the stock bubble in the US - and ended in late 2018 in a crash. One could also say: Seldom is it possible that so much money that taxpayers have previously earned has been squandered so economically senselessly.

Tax competition? Are you serious?

So what should our federal government now do with similar tax cuts? Because it demands the international tax competition? Not serious, right?

To abolish the solidarity surcharge would cost Germany's finance minister almost 20 billion euros - almost two-thirds of which relieved the richest ten percent of the population. Reducing corporation tax from 15 to 10 percent would mean a further 17 billion euros less in the fund, according to DIW tax expert Bach - which almost exclusively (16 billion) would benefit the richest ten percent of the population.

This would mean that much of the surplus that was left in the German state budget in 2019 would disappear. For something that would not help against a recession, but lacks money for other things.

And in addition poor and rich in the country would drift further apart; because it renders only those richer, which are being reinterpreted by Mr. Merz or our Minister of Economics to terribly disadvantaged service providers - even though these top ten percent are already among the biggest, if not the only big winners of the upswing for a decade. Disadvantaged? Because they have not received tax gifts for years? Heartbreaking.

It must be a strange understanding of economics to find that good. Or quite cheeky lobbying.

REF: http://www.spiegel.de/wirtschaft/soziales/warum-steuersenkungen-nichts-bringen-kolumne-a-1247456.html