Germany

Brandon GoehringPreston Van WinkleChristopher Keizer

Julian Khalifa

German GovernmentGermany is a republic with a parliamentary democracy and a bicameral system of government, made up by the Federal Government, Federal Parliament, the Federal Council, and the Federal President.

Federal Government and Parliament

Federal Government known as Bundesregierung

Comprised of the Chancellor and their Ministers

Ministers are made up from members of the Federal Parliament.

Parliament known as Bundestang

Comprised of elected representatives

Elections held every 4 years

Representatives draft and pass legislation

Additionally, approve annual budgets and vote on the deployment of the German army

Federal Council and President

Council known as Bundesrat

69 members representing the state’s interests at federal level

Involved with creating and approving legislation.

President known as Bundespräsident

Elected for a 5 year term by Federal and State Parliament

Head of German State

Mostly ceremonial responsibilities within and outside of Germany

Ability to appoint and dismiss the Chancellor

Taxation in Germany

Germany is a Federal Republic

Taxes levied by three levels of Government

95 percent of taxes imposed on the Federal level

Major taxes

Income tax

Value Added Tax (VAT)

Corporate taxes

Abide by fiscal policy (general tax law)

Tax Break Down

•The taxation is broken down into classes based on income and personal status.

• class I = single

• class II = single parent (living alone with the child/children)

• class III = married and spouse has no income or lower income

• class IV = married and similar income to spouse

• class V = opposite of class III, ie this is the class your lower earning spouse has if you have III

• class VI= for a second job or for deduction without proper employee information

Major Taxes•Income Tax

• Use Progressive Tax structure

•  Ranges from 0% to 45%

•Corporate Tax

• Generally just below 30%

•Value-Added Tax

• all services and products are subject to VATs

• 7% to 19%

Tax Revenue

•German Tax Revenue totaled €593 billion in 2014.

•Distributed to the three levels of German government

• Federation

• States

• and Municipalities

Tax Revenue of Germany

Spending•8 prominent expenditures.

• Health

• Social Security

• Defense

• Income Security

• Interest

• Education

• Environment

• International Affairs

German Spending

German Budget

•Prior to recession, Germany ran a deficit of 0.3 in 2007

Relatively small but still a deficit

• 2007 German budget proposed a 42.4 percent cut in revenues and a 2.3 percent cut in expenditures

• 2008 budget also proposed a cut to revenues, but of only 2.3 percent and an increase in expenditures of 2.5 percent

German Budget 2006-2010

Cause of the German Recession

Collapse of world trade markets (recessions in other countries) was the primary cause of the recession in Germany

This is unlike most other major nations like the US

Germany's recession is unique because it was not preceded by a large credit bubble.

Effects on the Economy

At the time of the German recession, the country was just beginning to decrease unemployment.

Before the recession, unemployment was about 10 percent

In 2007, unemployment was shrinking to about 8 percent

In 2008, unemployment bottomed out at about 7.5 percent

Effects on the Economy

Effects on the Economy

GDP went from 3435.68 B in 2007 to 3746.92 B in 2008 then dropped to 3412.98 B in 2009

Germany’s Recovery

Germany’s economy largely based off exports

Germany experienced a very strong 2006

Stronger than the United States’

Unemployment was steadily falling

Past decades spent reforming the labor market

Entering the recession, Germany was in a very strong position

Germany’s Recovery

Rather than cut jobs, German government encouraged firms to cut hours

Workers who lost hours were issued income subsidies

Large drop in output, minor increase in unemployment

Far less unemployment than the US or any other major nation

Average workweek hours fell below the United States’

Total hours worked remained above the United States’

Germany’s Recovery

China one of Germany’s largest trading partners

Many German goods exported to China

As China began to recover, Germany began exporting goods immediately

Firms didn’t need to hire new employees

Simply had to increase the hours of their current workers to increase production

Europe’s recovery was not as swift

Many European nations still recovering meant a weak Euro

This lowered the real cost of German exports

Quick recovery due to multiple factors

Rather than cut jobs, firms cut hours and the government provided income subsidies

A weak Euro made German exports more appealing to foreign investors

Works Cited Page

http://commonslibraryblog.com/2014/02/26/recession-and-recovery-the-german-experience/

https://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000202696/Germany's+2007+Federal+Budget%3A+Finance+Minister+Pe.PDF

http://www.economist.com/blogs/freeexchange/2010/11/cross-country_comparisons

http://www.ukgermanconnection.org/politics-german-government

http://www.heritage.org/index/country/germany

http://www.concordcoalition.org/learn/budget/federal-budget-pie-charts

http://data.worldbank.org/indicator/NE.CON.GOVT.ZS

http://www.vatlive.com/country-guides/germany/german-vat/

http://www.economist.com/blogs/freeexchange/2010/11/cross-country_comparisons

http://www.nytimes.com/2013/05/11/business/economy/a-faster-recovery-in-germany-than-elsewhere.html?_r=0