Germany needs a reform of (capital) income taxation

Calls for a reform of income taxation in Germany have been increasing. The reform proposals extend from the Kirchhof flat tax idea to the introduction of a dual income tax, which is favoured by the German Council of Economic Advisors and by Hans-Werner Sinn. All agree that a comprehensive tax reform should support economic growth, ensure increased efficiency and fairness and safeguard adequate government revenue. Against this background this article analyses the taxation policy of the SPD/Green Party coalition during the two last legislative periods to determine whether and to what extent the measures that have been introduced since 1998 have met these goals.