The Effect of Demographic Transition on Tax Revenues in Germany
IW-Trends
German Economic Institute (IW)
As a result of high net immigration, both Germany’s overall population and its workforce potential are currently growing. However, within a very few years this demographic trend will be reversed, leading to a decline in the population as a whole and especially in the number of those gainfully employed. The fall in income tax revenues resulting from a shrinking and ageing society will place a huge strain on government finances, an effect further enhanced by the shift of the tax burden from pension contributions to pension benefits. In 20 years’ time the annual price-adjusted revenue from income tax is simulated to be € 18 billion or almost 7 per cent lower than today.
Martin Beznoska / Tobias Hentze: Die Wirkung des demografischen Wandels auf die Steuereinnahmen in Deutschland
IW-Trends
German Economic Institute (IW)
Employment shortly before and after retirement
As a result of demographic trends, around a quarter of all employees in the mechanical engineering sector are expected to retire in the next ten years. This corresponds to more than 296,000 people.
IW
IW Population Forecast 2024
The demographic transition poses major challenges for policymakers, business and society as a whole. Policymakers seeking solutions to these challenges mainly base their decisions on the quantitative data of population forecasts.
IW