Page:EB1922 - Volume 31.djvu/278

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244
GERMANY


to bear by far the largest part of the costs of the war, the interest on the war debts, the war pensions and compensations, the whole of the burdens of the Peace Treaty, etc. ; these swelled the budget expenditure to such an extent that the requirements of the individual states were left far behind. The great sources of direct taxation had now to be made free for obtaining revenue for the Reich. Events had made compulsory a strong centraliza- tion in German finance. By an order of the Finance Department of the Reich on Sept. 10 1919, the management of all fiscal levies was handed over to the central Government. A further order, of Dec. 13 1919, provided for the formal right of taxation. A de- cisive step was taken in the National Taxation Law of March 22 1920, which fixed on a new basis the position of the three great receivers of taxes, the Reich, the individual states, and the subordinate local Governments towards each other. Whereas the pre-war rule was that the use of certain sources of taxation by the individual states forbade the Imperial Government to use such sources, the new regulations reversed the position, ruling that the use of certain sources of taxation by the Reich forbade the collection of similar taxes by the individual states and local communities unless expressly empowered to collect a supple- mentary levy. Counties and municipalities kept their most important independent tax sources the taxes on landed property and industrial activities. They were obliged to levy an amuse- ment-tax, and were entitled to tax the lowest incomes which escaped the general income-tax. In principle they became pen- sioners of the State, receiving of the revenue from Reich taxation two-thirds, of the companies-tax also two-thirds, of the inheri- tance-tax one-fifth, of the tax on acquistion of landed property one-half, and of the turnover-tax 15% (i.e. 10% for the counties and 5% for the municipalities). This was a most important step in the direction of laying a sound basis for Reich finance.

In the place of the various tax departments of the individual states there had to be created the gigantic machinery of a central Finance Department for the entire Reich. It could not come into existence without much early trouble and failure. The new department was at first quite unable to carry out the regu- lations, and only slowly and gradually came the introduction and collection of new taxes. And another difficulty followed quickly in consequence of the new regulations for financial management. The unification of the railways in Germany had been, like the unification of taxation, an old demand, but one which could not be carried out in times of peace, when the railways were a valuable source of revenue to the states, more especially to Prussia. Now it was accomplished, and the Reich, which previously had managed only the railways of Alsace- Lorraine, from April i 1920 took over all the railways. But the railways, instead of bringing in a profit, now found themselves with a deficit. From the moment, however, that the Reich had taken over the important sources of tax revenue, it was obliged to take over the railways as well, since the individual states were not able to carry their losses, and these losses now fell on the Treasury of the Reich.

With this basic change in organization came now the extension of the field of taxation. Between Sept. 1919 and March 1920 a system of new taxes for the whole Reich was created. The taxation of income was carried out in three different ways.

First comes the unified tax on income, which came into force on April i 1920. The rate of taxation is as follows:

A mount of Income For part or the whole of the first 24,000 marks. For every additional (whole or part) 6,000

5.000

S.ooo

5,000

5,000

70,000

80,000

200,000

all further amounts ....

Rate per cent

10 20 25 30

35 40

45 50 55 60

Thus, 60% of any income exceeding 400,000 marks (now paper marks) has to be handed over as tax to the Treasury. On an income of 30,000 marks the tax is 3,600 marks; on 50,000 marks

it is 10,000 marks; on 200,000 marks it is 81,600 marks; and on 1,000,000 marks it is 551,600 marks.

A reduction in these rates is allowed only in so far as an existence minimum and the numbers in the family are taken into consideration. This is arranged so that, for every person subject to pay tax and for each member of his household not independently taxed, the taxable amount of income is reduced by 1 20 marks, provided the dutiable income does not exceed 60,000 marks, and by 60 marks where the income is between 60,000 and 100,000 marks. A married man subject to the tax, with four children and an income of 24,ooomarks, will, for instance, obtain a reduction of 720 marks. Taxation of those who receive salaries or wages is assured by making the employer answerable for retaining from the salary or wage a proportionate amount in advance and paying it over to the tax collector.

To this income-tax, affecting the total income of the subject, is added, as super-tax, a levy on income from investments, in distinction from earned income, i.e. from dividends on shares, etc., interest on loans and mortgages of all kinds, interest on advances of any description, especially on deposits in banks and savings banks, rents, etc., and discounts on bills, including Treasury bills. The tax is 10 % on the whole return on the capital. An exception is made only in the case of small investors over 60 years of age or incapacitated from work. These have the tax on returns from capital included in their income-tax, as follows: on an income of not more than 5,000 marks, the whole amount; up to 6,000 marks 90%, the rate being reduced with every further 1,000 marks by 10%. On incomes of over 14,000 marks this relief terminates.

The third form of taxing incomes is the companies-tax, which operates as a super-tax on enterprises carried on by companies, including foundations, institutions and other societies for the management of property. This tax is 10% generally, on the total dutiable income. For societies working for gain (companies with shares, societies with limited liability, etc.) there is, in addi- tion, a special tax on the distributed profit, calculated on the proportion of the distributed amounts to the capital, so that where the profit is only 4% on the capital the tax is 2% on the distributed amounts, rising by i% up to 10% of the distributed amounts if the profit on the capital is 6,8, 10, 12, 14, 16, 18% and over. The first 3% of profit on the capital is tax-free.

The total taxation on income, from the three forms of levy, works out as follows: Income from shares, for instance, is taxed under each of the three forms. The company itself has to pay on its income in proportion to its own liability; then the distributed profit is reduced by the 10% tax on return from capital; and finally the shareholder has to pay income-tax on his dividends.

Taxation on property (capital) was also imposed in three forms. First of all came the war-tax (Kriegssteuer) on property increase, which hits any increase of over 5,000 marks in the value of property during the war and immediately after the war (difference in property between June 30 1919 and Dec. 31 1913), nobody keeping a larger increase than 172,000 marks. The following table (in marks) indicates its working: Increase in

Property

10,000

15,000

20,000

25,000

30,000

35-ooo

40,000

50,000

100,000

150,000

200,000

300,000

400,000

500,000

800,000

i ,000,000

2,000,000

4,000,000

5,000,000

10,000,000

Amount of Tax 1,000 1,75 2,500 3.500 4.500 6,000 7.500 10,500 30,500 55,500 83,000 148,000 233,000 333.000 633,000 833,000 1,833,000 3,833,000 4,833,000 9,833,000