Tax Law

Prospects for Corporate Tax Hikes in U.S. and Germany

After the September 27 election Angela Merkel is likely to retain her hold on leadership of the German government. The burning question is whether the Chancellor's conservative CDU party will continue the "grand coalition" with its main rival, the center-left SPD.


The implications for tax policy are large. If the CDU-SPD coalition continues, German businesses -- like their counterparts in the United States -- are likely to face tax hikes from a government that gives priority to deficit reduction. But if Merkel ends up allied with the FDP, not only is it possible for business tax hikes to be avoided but business tax cuts may even be possible.


Meanwhile back in the USA,... [t]he Obama budget proposed hundreds of billion of dollars in business tax increases. And the tax commission headed by Paul Volcker is likely to propose more when it reports to the President in early December.

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