The Problem with the Current German Tax System
Complexity of Germany's Tax System Criticized as Unfair by Expert
Every Year, Millions of Germans Struggle with Tax Returns. As Sebastian Blesse, financial expert from Leipzig University, explains, the complex German tax system leads to injustice and encourages tax evasion.
The Impact on Low-Income Individuals
Low-income individuals are more likely to be deterred from filing a tax return.**
The Role of Bureaucracy
Scientist Blaësse highlights that the German Income Tax Act has doubled in length since 1980. This excessive complexity, with too many deduction opportunities and documentation requirements, deters many from filing tax returns.
How other Countries Improve with Pre-filled Tax Returns
Blaësse proposes following the example of other countries like pre-filling tax returns sent by the tax authorities that only need to be checked and supplemented by citizens.
Potential Solutions
Reducing the Complexity of the Tax System
The goal should be to reduce and simplify the tax system, as studies from the USA have shown that citizens would be willing to pay $130 more in taxes if a complex system were replaced by a pre-filled tax return. This could save tax administration staff, allowing income tax reductions.
Studies Show the Link Between Complexity and Tax Evasion
Blaësse also refers to his own study, which shows that tax evasion increases as taxes become more complex. "The knowledge that people generally have problems with taxes, how they should be filled out, makes it almost okay if you evade taxes if you don't look too closely."
The High Tax Morale of Germans
Despite the complexity, Germany has a high tax morale, as shown in a survey of 92 countries where Germany came 11th.
Consequences of Tax Evasion
A High Dark figure exists in Saxony
Saxony's tax investigators have been more successful than they have been in a long time. However, the Left party suspects a high dark figure and demands more staff.
It's Time for Change
The time has come to streamline the German tax system, focusing on digitalization, simplifying procedures, reducing complexity, offering targeted incentives, and increasing enforcement to combat evasion. These changes will encourage compliance and generate more revenue for Germany's public sector.
Blaësse suggests adopting pre-filled tax returns from tax authorities, as seen in other countries, to simplify the complex German tax system that leads millions to struggle with returns every year.
Complexity in the tax system, as highlighted by Blaësse, not only discourages filing but also inadvertently encourages tax evasion, as per studies that link complexity with an increase in tax evasion.
