Geoscience Reference
In-Depth Information
Common risks required common solutions. The Weimar constitution facili-
tated this process by limiting the veto capacity of the l ander in the Reichsrat
(the council of l ander respresentatives). Whereas in the Imperial Constitution
(1871) the Reichsrat had an absolute legislative veto, the Weimar Constitu-
tion limited it to a suspending veto that could be overruled by a qualified
majority of the lower chamber (Reichstag). Consistent with the predictions of
this topic's argument, this shift toward a more centripetal system of represen-
tation translated quickly into changes in the fiscal structure. The tax reform
of 1920 made taxation an exclusive responsibility of the central government,
thus increasing its revenue autonomy. The states “could regulate their tax
affairs autonomously only insofar and only as long as the central government
abstained from enacting nationwide standards (Article 8 of the Weimar Con-
stitution)” (Manow
2005
: 236). Similarly, the central government assumed full
control of the design and implementation of unemployment insurance in 1927
and even pursued the centralization of social assistance policies. This expan-
sion and centralization of social policy was purposefully designed to prevent
“a federalist fragmentation of living conditions” (Manow
2005
: 238).
Fourth, the focus of political conflict was less on the scope of interpersonal
redistribution and more on the allocation of its cost across the different levels
of government. The central government used its new constitutional position to
shift costs downward, thus triggering a political conflict over the distribution
of resources among the different levels of government that added to Weimar's
political instability and ultimate failure (Hefeker
2001
).
This quick overview provides the background shaping the design of Ger-
many's fiscal structure before 1990. Many of the Weimar's lessons carried over
to the design of the Federal Republic's fiscal constitution. Concerns about the
link between regional inequalities and political stability led the designers of the
German Constitution to establish a requirement for uniformity of living con-
ditions within the federation as the driving principle of the overall institutional
design (Scharpf
1999
). In its original format the requirement reads as follows
(GG 1949:#72.2.#106.3):
[...]72.2.. - In the field of concurrent legislative power the federation has legislation
if and insofar as the establishment of equal living conditions or the preservation of legal
and economic unity necessitates, in the interest of the state at large, a federal regulation.
[...]106.3.2. - The coverage requirements of the Federation and of the States (Lander)
are coordinated in such a way that a fair balance is struck, any overburdening of tax
payers precluded and uniformity of living conditions in the federal territory ensured.
To meet these requirements, Germany's post-WWII fiscal structure combined
three distinctive features. The first one, directly inherited fromWeimar and rein-
stated by Adenauer in the years immediately following the approval of the new
constitution (1949), was the development of a series of centralized, occupation
and insurance based, uniform policies in the realm of interpersonal redistribu-
tion (t). Pensions and unemployment benefits are earning based, closely tied to
