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Income Taxation in the United States and Germany: The Rugged Individualist Meets the Social Activist  

Author:  Walter Schwidetzky, J.D., M.B.A., LL.M.; Dr. Rolf Eicke.

Source: Volume 27, Number 04, Summer 2010 , pp.3-26(24)

Journal of Taxation of Investments

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Different countries find different solutions to raising revenues and taxing their citizens. The United States rarely looks outside of its own borders for answers. Yet other countries may have looked at a given issue and come up with intelligent answers that could helpfully inform U.S. decisions. The converse is, of course, also the case. One of the striking things about doing comparative tax analysis is how differently, but legitimately, different countries can answer the same question. There also times when one country’s answer is demonstrably superior to that of another country. This article, which will be continued in the next issue of the Journal, compares German and U.S. income taxation of individuals, primarily individuals who are employees or self-employed professionals. Part 1 of this article provides some relevant background information on the German and U.S. legal systems; discusses the relevant constitutional issues, including the impact of decisions of the European Court of Justice on German tax law; reviews overarching doctrines that apply to the two tax systems. Part 2, which will appear in the next issue of the Journal, will explain and analyze how the two countries get to taxable income, including a review of how each country taxes investments.


Affiliations:  1: University of Baltimore School of Law; 2: Ernst & Young.

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