Taxes are a central element of economic policy and significantly impact a country’s competitiveness. In the face of global changes such as increasing digitalisation, climate change, and an ageing population, tax issues are becoming ever more important. Many countries are currently facing the challenge of adapting their tax systems to these new economic realities.   The latest edition of our ZEW Monthly, which focuses on “Taxation”, examines several key aspects of tax policy and its effects on the economy. One study reveals that significantly improving Germany’s tax attractiveness would require reforms leading to substantial tax revenue losses. At the same time, an analysis warns of the negative effects of an EU directive on tax transparency, which could jeopardise the attractiveness of Member States for business. Notably, one study assesses the OECD’s global tax reform as positive for developing countries, suggesting that it could lead to higher tax revenues and a fairer international tax system. RESEARCH ON TAXATION ↗ ENHANCING GERMANY’S ATTRACTIVENESS THROUGH TAX REFORM    The current Mannheim Tax Index of ZEW Mannheim underscores Germany’s continued status as a high-tax country in global tax competition. The effective average tax burden for profitable investments is 28.5 per cent in 2023 – nearly 10 percentage points above the EU average. However, potential measures to significantly improve Germany’s international standing imply substantial tax revenue losses and heightened risks of free riding.   More about the study ↗ EU DIRECTIVE FOR TAX TRANSPARENCY THREATENS LOCATION ATTRACTIVENESS    The EU directive on public country-by-country reporting requires multinational corporations to make their tax activities more transparent starting this year. The aim is to create a level playing field between purely domestic and multinational companies. However, a study by ZEW and the University of Mannheim reveals that the directive primarily imposes obligations on European companies. The study, headed by Christoph Spengel, Research Associate at ZEW and Professor of Taxation at the University of Mannheim, is based on an expert survey and corporate financial data from the Orbis database.   More about the study ↗ GLOBAL TAX REFORM SURPRISINGLY POSITIVE FOR DEVELOPING COUNTRIES    In October 2023, the OECD released a multilateral agreement reigniting the debate on the taxation of the digital economy. The UN proposed an alternative tailored to the needs of developing countries. Both proposals aim to grant states new taxing rights. While the OECD approach has been criticized in academia for not adequately addressing the tax needs of developing countries, a new study by ZEW and the Universities of Mannheim and Kiel now reaches a different conclusion.   More about the study AT A GLANCE ↗ HIGH TAXATION PUTS GERMANY AT A DISADVANTAGE INTERNATIONALLY    In the international tax competition for corporate investments, Germany falls into the category of high-tax countries. In terms of the tax burden for a highly qualified labour force, however, Germany is positioned in the mid-range of the ranking. Due to the recently introduced global minimum tax, the taxation of skilled professionals could become more relevant in the future. This has been illustrated by the current BAK Taxation Index, which was established 20 years ago by ZEW on behalf of BAK Economics. How to read the chart: The effective average tax rates for companies in the USA, Germany, France and the United Kingdom from 2003 to 2023 are shown. Since the fundamental tax reform of 2008, the tax burden for German businesses has remained virtually unchanged, while other industrial nations such as France and the United States have lowered their corporate tax rates, making them much more attractive from a fiscal standpoint. More about the BAK Taxation Index CURRENT ZEW TOPICS ↗ DATA SHARING: POTENTIAL UNTAPPED BY FIRMS    Data sharing among firms, involving the provision and mutual use of data, holds significant potential for the economy. However, German firms have yet to leverage the opportunities of shared data usage. These are the results of a representative ZEW survey of approximately 1,400 firms in Germany’s information economy and manufacturing industry.   More about the study ↗ OLYMPIC GAMES ENCOURAGE PEOPLE TO EXERCISE – BUT ONLY IN THE SHORT TERM    Olympic Games are typically accompanied by discussions about whether they are economically or socially beneficial. The 2024 Summer Olympics in Paris is no exception, as it has both supporters and critics. Nicolas Ziebarth, head of the Research Unit “Labour Markets and Social Insurance” at ZEW and professor at the University of Mannheim, has commented on this matter.   Read the full comment ↗ EXTENT OF INEQUALITY SIGNIFICANTLY OVERESTIMATED    A ZEW study shows that a well-known study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman significantly overestimates inequality after taxes and transfers in the US. The three authors assume that many government transfers are distributed as unequally as monetary income. This assumption is not very plausible and, as the study shows, is clearly refuted, at least for public spending on education.   More about the study ↗ HOW SCIENCE CAN BETTER CONTRIBUTE TO CLIMATE PROTECTION Science should be a role model for rational and effective climate protection measures. In this context, science and politics should focus their efforts on innovation. Climate and energy technologies in particular need a massive boost, not cuts. Economists Achim Wambach and Axel Ockenfels explain why a global approach is necessary.   Read the full article EVENTS ↗ CONFERENCE ZEW CONFERENCE ON PUBLIC FINANCE    On 16 and 17 May 2024, ZEW organised the annual ZEW Public Finance Conference, sponsored by the Arbeitskreis für Europäische Integration e. V. This year’s focus topic was “Government-led Transformation”. Around 100 participants discussed this and other topics related to public finance and political economy in over 65 presentations. In addition, the event programme featured two high-profile keynote lectures and two panel sessions with invited guests.   Read the full event report ↗ CONFERENCE DIGITAL ECONOMY EXPERTS CONVENE AT ZEW CONFERENCE    At ZEW on 27 and 28 June 2024, the 22nd Annual Conference on the Economics of Information and Communication Technologies took place, organised by ZEW’s “Digital Economy” Research Unit. The two-day event saw international scholars presenting and discussing their latest empirical and theoretical research findings in two parallel sessions. The conference, organised this year by Professor Irene Bertschek, Dr. Dominik Rehse and Luca Sandrini, PhD, has long been considered one of the most prominent scientific conferences on the digital economy. This is evidenced by the more than 100 scientific papers submitted to the conference, which was attended by around 85 participants.   Read the full event report UPCOMING ↗ WORKSHOP TWELFTH COMPETITION AND INNOVATION SUMMER SCHOOL (CISS)    From 30 September to 4 October 2024, the Competition and Innovation Summer School offers young researchers in the fields of innovation and competition economics the opportunity to discuss their dissertation projects in great detail within a group of experienced and renowned scholars, as well as other PhD students and postdoctoral researchers, in an inspiring environment.   More about the event → CONTACT FOR QUESTIONS OR SUGGESTIONS ON THE CONTENT Dr. Daniela Heimberger | daniela.heimberger@zew.de EDITORIAL TEAM   Yvonne Bräutigam // CvD   Simone Mann // Design   Pascal Ausäderer // Press Officer   Julia Glashauser // Online Communications Officer     Funded by:     ZEW – Leibniz Centre for European Economic Research L7, 1 · 68161 Mannheim Phone: +49 (0)621/1235-01 E-mail: zewmonthly@zew.de Website: www.zew.de   Executive Directors: Professor Achim Wambach, PhD; Claudia von Schuttenbach Chair of the ZEW Supervisory Board: Ministerial Director Dr. Hans Reiter Registered Office: Mannheim Local Court Mannheim HRB 6554 USt-IdNr.: DE188318292   Commitment to Data Protection   Detailed Legal Note   Notification on the General Data Protection Regulation (GDPR)   Unsubscribe from ZEW Monthly