Rich Country and Poor State
By Markus Sievers
[This article originally published in: Frankfurt Rundschau online, February 1, 2004 is translated from the German on the World Wide Web,
On dirty streets, past dilapidated houses, the prosperous citizen drives his luxury coach, freshly polished and equipped with all the trimmings. In a seedy park, his family unpacks their exquisite lunch package to enjoy delicacies in the middle of the unremoved rubbish.
With this satirical depiction of conditions in the US, the economist John Kenneth Galbraith castigated the contradiction between individual wealth and public poverty. The tendency to indulge privately and put the state on a slimming diet prompted the Harvard professor to ask: "Does this actually represent the American spirit?"
The answer today turns out to be No. This mentality is not American but international or global. This mentality defines the economic debate in nearly all the rich nations of this world and everywhere in Central Europe.
While the overall social prosperity in Germany rises, the state under pressure of empty budgets economizes from the socially weak, the sick and unemployed. Politicians press for smaller subsidies for pensions. Greater personal contributions for health care are expected from people. Overdue investments in education and the infrastructure are postponed.
All the austerity efforts cannot eliminate the low tides in the budgets because Red-Green cannot cut as quickly as revenues fall. How does the nation react to the financial crisis of public institutions? The nation discusses tax cuts.
As though seized by a mysterious infection, the parties compete for the dubious honor of leading the state to bankruptcy. Consciousness for the social balance understood as a balance between public and private prosperity is clearly lost.
Powers of resistance against the sickness exist among the SPD (Socialist party or Social-Democratic party of Gerhard Schroeder). At their party day in Bochum, the social democrats rejected further relief for taxpayers as unaffordable. In his government declaration on Agenda 2010, the chancellor praised the wage cuts in his term in office..
With the strongest attack on private incomes, the times in which Germany had a sad top place among industrial countries are past. When the last stage of the tax reform takes effect in 2005, the tax rate for the top income groups will have fallen from 53 percent to 42 percent within six years. Germany is everything but a high tax country as studies of international organizations also prove. This contradicts the general understanding.
Businesses profit more than private people from the Red-Green generosity. Corporations may temporarily deduct their profits. The latest compromise introduced some cautious corrections. Nevertheless the lobbyists of the mammoth corporations play with their credibility if they do not soon adjust their mourning litany about the supposed greediness of the taxman to reality. When the government resolved the 2005 tax reform, the financial expert Friedrich Herz (CDU, centrist party of Helmut Kohl) warned against sinning against our children and grandchildren.. The self-styled advocate of future generations would finance his charity for taxpayers with spending cuts in excess of the controversial cuts of 2003.
Whoever says yes to tax rates of 12, 24 and 36 percent must be clear about the consequences. He must also say yes to student fees and withdrawal of public funds from social projects. He must support less redistribution, oppose solidarity and encourage retreat into the private.
Simpler rules may be vital in a tax system that plagues millions of people... The CDU wants to pave the way into another republic - with a collapsed state that loses its ability to act.