Volume 12, Issue 3

The current system to elect the German Bundestag (i.e. German Federal Parliament) has a major defect: more votes for one party can lead to less seats in the parliament for that same party - the so called negative voting weight. The German Federal Constitution Court has requested the Parliament to modify the electoral system in order to avoid this malfunction. There are lots of possible solutions to that problem. In this paper we attempt to evaluate several possible modifications from a Social Choice perspective. We introduce a simple system of conditions for electoral systems by which we classify possible modifications. It follows that there cannot exist an electoral system that satisfies all of these conditions. There are solutions, however, which satisfy more conditions than other possible modifications.

Swiss banking secrecy tempts foreigners to remain silent about capital incomes and, thus, not pay taxes as obliged by law, but residents of Switzerland as well. Therefore, Switzerland introduced a withholding tax on capital income in order to make domestic residents report levels of wealth and capital incomes properly. We ask whether a withholding tax rate of 35 percent achieves this goal. For this purpose, marginal income tax rates are computed and income distributions are estimated for each canton. From these we identify income levels and shares of tax payers for whom the withholding tax does not work as intended.

A simplification of the German tax law is the major intend when proposing a graduated tax rate to replace the current German formula based tax scale. A plain tax rate structure requires catchy tax brackets (e.g. in 5.000 € or 10.000 € steps) and tax rates (e.g. tax rate differences of 5% or 10%). Our empirical analysis shows that such a graduated tax rate causes significant distributional effects and, depending on the particular form, affects different groups of tax payers in different ways. This holds in particular for the two graduated tax rate proposals from the German Liberal Party which additionally provoke substantial revenue losses. A graduated tax rate with little revenue and distributional effects compared to the current formula based tax scale lacks a plain structure and hence conflicts with the objective of tax simplification.

This paper analyzes the production of tax literature in Germany empirically. It provides evidence to reject the argument made by politicians and the media that Germany produces three quarters of the global tax literature. It also finds that regarding the length of the tax code and the actual costs of declaring taxes, Germany is middle of the class globally. Using a case study, the paper analyzes the motives of authors of tax literature. The evidence shows that most publications are not motivated by generating knowledge, but by self-marketing, lobbying, and personal satisfaction. Overall, publications on a specific topic follow a pattern of decreasing (rather than increasing) quality over time. These repeated publications without generation of incremental knowledge are due to the organization of the market for publications in Germany, but unrelated to features of the tax system.

After a short sketch of the history of modern business schools in the German speaking countries, their four major activity fields are considered: (i) academic teaching, (ii) scientific research, (iii) consulting and (iv) executive education. While teaching was traditionally dominant, research has gained more importance in recent decades, not only in Economics but also in Management departments. With respect to consulting, we have to distinguish between consulting for governments by economists and for private companies by professors of management. Executive education is mainly a domain of management (and law) departments; economists only play a minor role in this area. We conclude with discussing some of the ethical questions with which Economics and Management departments are confronted today.

A large number of German economists have spoken out against the package of aid measures provided by the Member States of the European Union and the International Monetary Fund (IMF) for the countries within the euro area that have been facing severe financial difficulties. This includes in particular the opinion of 189 German economists on the EU debt crisis (see the plenum of German economists, 2011) and the study of the Scientific Advisory Board of the Federal Ministry of Economics and Technology of January 2011. Above all many German economists question whether those measures were necessary in order to prevent the emergence of contagion risks and domino effects within the European monetary union following a restructuring in one of the euro area countries. This paper illustrates the main channels of possible contagion. It emphasises how important it is, especially given the current crisis situation, to maintain the confidence of international investors in the willingness of euro area countries to honour their debt. In this respect, contract compliance on the part of highly-indebted national governments towards their creditors is essential. By contrast, if in the case of Greece for example financial market participants were to perceive a debt restructuring as a viable and politically acceptabelle option in case financial problems emerge in individual euro area countries, access to the capital markets will be harmed for the majority of these countries for many years to come.