Tax reform

As tax reform a greater or fundamental change in the tax system or a single control law in a country is called. A tax reform proposal describes a concrete model or concept amending the tax law as part of a tax reform.

Justifications for tax reforms

Recurring arguments for reform are:

• Elimination of too high or too low taxation (eg non-taxation, national double taxation ) of certain parts or income taxpayers in the sense of increasing the tax justice. This includes the debate on cutting as deemed unjustified tax breaks as well as the demands for harmonization of tax rates or tax rates to those of other states.
• Simplification of tax law and increasing transparency.
• Especially in the area of corporate taxation increase the attractiveness for investment. The increased mobility of companies and high earners, coupled with an increased global tax competition reduces the state of design options here very difficult.
• Prevent creeping tax increases (so-called bracket creep ) by the interaction of creeping inflation and progressive tax scale.
• Changes in tax law because of the requirements of the case-law, for example. Response to judgments of the European Court, the Federal Finance Court and the Federal Constitutional Court

Tax reforms in Germany

Tax reforms as far-reaching changes of detailed provisions in the tax laws of Germany and with great impact on tax revenues relate in particular to the Income Tax Act, the Corporation Tax Act and the Value Added Tax Act.

Income tax rate reform in Germany in 1990 (elimination of the " middle class belly " )

Rate curves of marginal tax rates from 1990 to 2013 with taxable income of up to 280,000 euros / year.

Rate curves of the average tax rates from 1990 to 2013 with taxable income of up to 280,000 euros / year.

Rate curves for the years 1990 to 2014 taxable income of up to 30,000 euros / year.

Implemented tax reforms

Tax cuts on capital income and reductions in the top rate place since the 1970s, more than once:

• Abolition of double taxation through the introduction of the imputation system on 1 January 1977
• Abolition of the payroll tax to January 1, 1980
• Introduction of a continuous linear progressive tariff and lowering the top rate from 56 % to 53 % from 1 January 1990
• Abolition of the stock transfer tax from 1 January 1991
• Abolition of capital duty from 1 January 1992
• Abolition of the tax on business capital on 1 January 1998
• Suspension of property tax to 1 January 1997
• Introduction of a special top income tax rate of 47 % instead of 53% on business income from 1 January 1999
• Reduction in the corporate tax rate from 45 % to 40 % from 1 January 1999
• Introduction of the half-income system and reduction of the corporate tax rate to 25 % as of 1 January 2001., The trade tax may now be credited against the income tax.
• Lowering the top income tax rate to 45% from 1 January 2004; Introduction of an inheritance tax - free allowance of 225,000 euros and change the basis of calculation of the market value on their recognition for tax purposes
• Lowering the top income tax rate to 42 % as of 1 January 2005.
• Increase in the top income tax rate to 45 % as of 1 January 2007 ( in excess of 250,000 euros for the part of a stepped tariff)
• Introduction of Thesaurierungsbesteuerung in the context of corporate tax reform 2008
• Introduction of the flat tax in 2009 for capital income

These reductions in personal income tax rates were also accompanied by repeated increases in VAT rates, as the graph above shows.

• Ecological tax reform since 1998
• 2000 tax reform in Germany
• Corporate tax reform in Germany in 2008

Examples of tax reform proposals

Tax reform proposals in Switzerland

In Switzerland, the FDP has a control concept under the name Easy Swiss Tax presented (FDP of the Canton Zurich ) or coasters tax return (FDP of the canton Schaffhausen ) propagated.

With the Easy Swiss Tax the tax return is to be greatly simplified by many ways be deleted for deductions. This should tax loopholes. With the concept of the FDP wants to reduce income tax and net. Even a flat tax is under discussion.

At cantonal level, parliamentary initiatives, popular initiatives or petitions have been launched for the benefit of Easy Swiss Tax in the cantons of Aargau, Basel -Land, Schaffhausen, Schwyz, St. Gallen, Thurgau, Zurich and train.

The interpellation is the simplification of the tax system priority: On the federal level, the issue in the National Council on the basis of two parliamentary initiatives was treated? of FDP National Markus Hutter (filed June 21, 2007, completed on 1 October 2007, pending examination of concrete measures by FDF ) and the Motion individual taxation and simplify the tax system. EasySwissTax of FDP National Charles Favre (filed on 14 March 2007, rejected on October 1, 2007).

Tax reform proposals in other countries

In the U.S., a proposal is being discussed since 1999, which requires all federal taxes include income tax and social contributions to be replaced by a sales tax. The supporters of this reform proposal promise a simplification of tax legislation and economic stimulation.