Germany's Tax Revenue and its Total Administrative Cost

TL;DR

This paper assesses Germany's tax administrative costs, revealing they likely exceeded 20% of revenue in 2021, highlighting the need for system improvements and offering insights into causes and solutions.

Contribution

It introduces total administrative cost as a percentage of tax revenue as a comparative measure and provides a novel approach to estimate these costs.

Findings

Germany's 2021 tax administrative costs likely over 20% of revenue

High administrative costs indicate need for system reforms

Provides potential solutions and implications for policy improvement

Abstract

Tax administrative cost reduction is an economically and socially desirable goal for public policy. This article proposes total administrative cost as percentage of total tax revenue as a vivid measurand, also useful for cross-jurisdiction comparisons. Statistical data, surveys and a novel approach demonstrate: Germany's 2021 tax administrative costs likely exceeded 20% of total tax revenue, indicating need for improvement of Germany's taxation system - and for the many jurisdictions with similar tax regimes. In addition, this article outlines possible reasons for and implications of the seemingly high tax administrative burden as well as solutions.