Stimulasierung: Tax Relief and Infrastructure

From Spiegel Online, “Germany Seals 50 Billion Euro Stimulus Plan“:

Germany’s ruling political parties agreed on a two-year €50 billion stimulus plan, the biggest since World War II, at a meeting on Monday night to help Europe’s largest economy weather the financial and economic crisis.

The plan envisages €18 billion of new investment in the construction and repair of roads and the rail network and of schools and universities. Some of the money will also be used for faster Internet communication networks.

Taxes are also being cut, with the tax threshold being raised to €8,004 from €7,664, and the entry rate of tax will be lowered to 14 percent from 15 percent on July 1.

The German system of “cold progression,” under which taxpayers are shifted into higher tax brackets even when real incomes have not grown, is also going to be changed, thus bringing tax relief. Under the current system, the tax brackets aren’t adjusted for inflation.

In 2008, Germany cut its corporate rate 8.7 percentage points from 38.9 percent to 30.18 percent. As a result, Germany fell from having the third-highest overall rate among OECD to seventh-highest. The U.S. corporate tax rate is No. 2. (Thanks to the Tax Foundation.)

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