Policy Article

Potential for reducing subsidies in Baden-Württemberg (original publication in German)

Kieler Beiträge zur Wirtschaftspolitik, 4

This study reveals the subsidies granted by the German federal state Baden-Württemberg and its communities, how much the state receives from general subsidy programs of the German federal layer, of the EU, of the Federal Employment Agency, and of special funds, and which part of German tax privileges are allotted to tax payers from the state. In this context, the authors perform a comparison between the various German federal states. They discuss, in how far subsidies to the various recipients may be justified from the perspective of welfare economics, and which subsidies should be subject to a cutback. As a result, they arrive at the conclusion that the German fiscal system with its complex federal interrelations between the various layers renders perverse incentives to an individual federal state.