One major reason for Germany’ s high unemployment and the evident weakness of business investment is the nature of the tax system, which tends to 【A1】 _____ both individual effort and investment. 【A2】 _____ corporate tax rates are, in fact, very high and it is these rates that potential investors primarily look at. However, the actual burden 【A3】 _____ by companies is not as great as it might seem, because the tax base is fairly narrow. This combination in itself tends to encourage tax 【A4】 _____ at both the personal and 【A5】 _____ levels. Moreover, by international standards, firms in Germany are still taxed quite heavily.
A reform of corporate taxation, therefore, should start by 【A6】 _____ tax rates, cutting 【A7】 _____and broadening the taxable base. The resulting positive impact on growth would be reinforced if there were also a substantial 【A8】 _____ of the net burden.
How do the current plans for a reform of corporate taxation 【A9】 _____ these goals？ The overall tax burden on companies is to be brought down significantly, with the 【A10】 _____ of 35% being set. To this 【A11】 _____, a dramatic reduction in the corporate tax on 【A12】 _____ earnings is planned. The related drop in revenues is to be 【A13】 _____by changes in the rules governing tax breaks.
An approach incorporating these basic features would, be a welcome step. If realized in its present form, it should ensure that the objective of making tax rates more attractive for businesses is achieved. At the same time, however, it would be 【A14】 _____ if an excessive broadening of the taxable base made it impossible to attain the equally important goal of providing relief.
Comprehensive tax reform is needed in Germany to【A15】 _____ investment and to create new jobs, thus putting the economy on a higher growth path. The drop in revenues caused by the tax relief granted to both companies and 【A16】 _____ would, 【A17】 _____, be at least partially offset by the larger volume of tax 【A18】 _____ produced by economic growth. The gaps that remained should primarily be closed through spending cuts. If measure of this sort proved inadequate, then, as a last【A19】 _____, an increase in 【A20】 _____ taxes could perhaps be considered.