Germany’s Tax Revenue and its Total Administrative Cost

ArXiv ID: 2411.12543 “View on arXiv”

Authors: Unknown

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.

Keywords: tax administration, administrative cost, public policy, cross-jurisdiction comparison, tax revenue, Fiscal Policy

Complexity vs Empirical Score

• Math Complexity: 2.0/10
• Empirical Rigor: 4.0/10
• Quadrant: Street Traders
• Why: The paper’s mathematics is limited to basic arithmetic and ratios, lacking advanced formulas or derivations. While it compiles statistical data and proposes a novel estimation method, the approach relies heavily on surveys and approximations without detailed backtesting, quantifiable metrics, or implementation code, placing it closer to policy analysis than empirical quant finance.

  flowchart TD
    A["Research Question: What is Germany's total tax administrative cost?"] --> B["Methodology"]
    
    subgraph B ["Methodology"]
        B1["Statistical Data Analysis"] --> B3{"Novel Approach"}
        B2["Surveys"] --> B3
    end

    B --> C["Computational Process"]
    
    subgraph C ["Computational Process"]
        C1["Summing Costs"] --> C2["Divide by Tax Revenue"]
        C2 --> C3["Result as %"]
    end

    C --> D["Key Findings & Outcomes"]
    
    subgraph D ["Key Findings & Outcomes"]
        D1["Germany's Cost: >20% of Tax Revenue"]
        D2["High Burden Needs Improvement"]
        D3["Useful for Cross-Jurisdiction Comparison"]
    end