The Scope for Progressive Tax Reform in the OECD Countries: A Macroeconomic Perspective

Sarah Godar

Achim Truger

Over the past decades, the redistributive effect of the tax system in most OECD countries has been substantially and deliberately weakened by tax policies which reduce the tax burden on wealth. Personal and corporate income tax rates have been massively reduced and special provisions privilege capital income. At the same time, rich individuals and corporations have increasingly used legal and illegal tax evasion by shifting income or profits to low tax countries. If this trend continues, the disparities in income distribution will continue to rise. In the long run the financing of the welfare state will be seriously threatened.

However the budgetary stress experienced since the Great Recession, together with substantial increases in disparities in the distribution of income and wealth, have put progressive tax reforms back on the agenda in many OECD countries. There are some signs that the downward trend in redistributive taxation may be coming to a halt (Godar/Paetz/Truger, 2014). A number of international institutions have also commented in a more or less progressive way on how to achieve fiscal consolidation through a socially acceptable tax reform.

Interview with German prisoners union GG/BO about the recent prison strike in December 2015

Jörg Nowak

The prison population in Germany has not been a focus of trade unions in the past, but it is an emerging site of industrial labour. Out of 60.000 prisoners in Germany, around 40 000 are workers and the rest are either retired or sick. In 11 out of 16 federal states, prison labour is forced labour. All major automobile producers in Germany are subcontracting assembly work to prisons, as well as white-goods producers and solar-energy companies.

Prisoners earn between € (Euro) 1.50 and €2 an hour while the German minimum wage is €8.50, and they do not have a right to strike. Prison workers are covered by unemployment insurance but excluded from old-age insurance. A law for old-age insurance was planned in 1977, but never legislated. The companies that outsource work to prisons are exempt from contributions to social insurance funds. Thus the unemployment insurance is covered by tax-payers.

While prison guards have long been organised in two different trade unions, prisoners were not organised until 2014. Two prisoners in Berlin-Tegel created the prisoners’ union GG/BO (Gefangenengewerkschaft/Bundesweite Organisation) in May 2014, and it now has around 800 members in more than 40 German prisons. A section was founded in Austria in late 2015.