Policy Article

Avoid secret tax increase (original publication in German)

Kiel Policy Briefs, 41

The German system of income taxation is characterized by a strong degree of progression. “Bracket creep” due to the increase of nominal incomes leads to additional tax revenues in the range of €5 billion per year in the period 2011–2014. The incentives to work and to invest are impaired significantly. In order to avoid this, the author Alfred Boss suggests that the income tax system should be indexed according to the development of the nominal incomes on average. A step towards indexation should be the abolition of the 5.5 percent surcharge on the income tax.

Author

Alfred Boss

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