Fiscal Equalization between States in West Germany

H Zimmermann
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H Zimmermann: Abteilung für Finanzwissenschaft, Fachbereich Wirtschaftswissenschaften, Philipps-Universität Marburg, Am Plan 2, D-3550 Marburg, Federal Republic of Germany

Environment and Planning C, 1989, vol. 7, issue 4, 385-393

Abstract: Almost from the beginning of the Federal Republic of Germany in 1949, a sophisticated horizontal equalization mechanism with strong equalizing effects has existed between its states ( Länder ). Its historical and social background is shown briefly, and the equalization procedure, which compares the revenue potential of each state with a rough measure of its fiscal need, is described in detail. The far-reaching equalization of state revenues that results is evaluated under distributional objectives and above all on allocative grounds: There are few incentives for states to care for their own tax base, particularly because states have no tax-rate authority which would enable them to vary their revenues from own sources.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envirc:v:7:y:1989:i:4:p:385-393

DOI: 10.1068/c070385

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