The black box of the German tax system: explained

  • From Xhulia Likaj
  • Reading duration 2 min

Julia Jirmann's new book, „Blackbox Steuerpolitik - Wie unser Steuersystem Ungleichheit fördert. Ein Reformvorschlag”, explores how the German tax system plays a significant role in creating and reinforcing economic inequality. Germany is marked by a particularly unequal distribution of wealth compared to other Western democracies, with middle-income earners shouldering a high tax burden while the wealthy benefit from comparatively low tax rates. This disparity raises critical questions about fairness: Why do the super-rich often pay a lower percentage of their income in taxes than average citizens, and how can the system be changed to benefit all?

Jirmann provides clear explanations of complex tax issues, answering questions such as who Germany's wealthiest individuals are, who inherits the most, and how tax obligations vary between regions, particularly East and West Germany, as well as between men and women. Her work challenges common misconceptions about taxation and proposes specific reforms for a fairer tax system.

Beyond the individual impact, the author argues that high levels of economic inequality have broad social consequences, eroding social cohesion and diminishing the state's ability to address essential public needs. A fairer tax system would strengthen the government's capacity to address critical challenges like climate change, public transportation, education, and security.

The book serves as both a critique of Germany's current tax policies and a call to action at a moment when concerns about living standards are spreading to the middle class. As a recent **study by the Hans Böckler Foundation **reveals, income inequality and poverty in Germany are on an upward trend since 2010, with economic insecurity now affecting not only the poor but also parts of the middle class, who have expressed fear of losing their current standard of living due to economic pressures. If left unaddressed, this trend risks deepening the disconnect between economically disadvantaged groups and political institutions. Many people in poverty have limited trust in democratic and legal institutions and feel that they lack a voice in society. This growing anxiety has been described as a “participation crisis,” where economic hardship is coupled with a sense of political alienation.