A Negative Income Tax Proposal for Germany

Maximilian Sommer
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Maximilian Sommer: Catholic University Eichstaett-Ingolstadt

Chapter Chapter 4 in A Feasible Basic Income Scheme for Germany, 2016, pp 75-105 from Springer

Abstract: Abstract The chapter discusses a new basic income scheme proposal for Germany in order to contribute to the on-going debate concerning a reform of the income tax and the social security system. The reduction of inconsistency between the two systems and an increase of work incentives are in the focus of the approach. Like almost all basic income models, the proposal is grounded on the ideas of a negative income tax. However, it offers a choice to the households between two different welfare schemes whichever is more suitable for their specific situation. Furthermore, the new proposal is based on a clear and transparent ethical foundation that is inspired by the Catholic social teaching.The chapter starts with an explanation of the German concept of subsistence level as the lower bound of social welfare payments in Germany. The proposed basic income scheme is explained afterwards. The focus is especially on the build-in choice option as tax units can choose between two different tax-and-transfer schemes. In addition, the proposal includes a new approach to child support which results in higher child-related benefits as in the prevalent scheme. This is followed by a comparison between the proposed reform and the current income tax and social security scheme in Germany.

Keywords: Labor Supply; Social Security System; Subsistence Level; Reform Proposal; Housing Allowance (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-319-24064-0_4

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DOI: 10.1007/978-3-319-24064-0_4

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