The German Municipal Budget and its Relation To the General Government

To a proper understanding of our subject it seems necessary to reverse the order suggested by the title and first explain the relation of the local to the general government. No attempt will be made to explain in detail the complicated relations of the German municipality to the various governmental units of administrative areas within the German Empire, though a complete study of the municipal budget would require it; for every taxpayer living within a rural or urban commune contributes directly or indirectly to several governmental organizations above the municipality. Obviously many of the sources of revenue of both the state and the imperial governments lie within the city. The income tax, for example, is a source of both state and municipal revenue, while the unearned increment tax, introduced into Frankfort in 1904, was adopted by the Imperial Government in 1911. It is now provided by law that this tax shall be collected and administered by the various states and the proceeds are to be divided between the imperial, state, and municipal treasuries. In practice, however, this tax is collected by the municipal authorities who may, by sanction of the state, levy a supplemental unearned increment tax not to exceed 100 per cent of the imperial tax. I mention these facts here merely to show the complicated financial relations between the local and general governments that we may better appreciate the problems presented to the budget makers. Before entering upon details, other facts of a general nature should also be kept in mind. In considering German municipal practices it should be remembered that the German Empire is composed of twenty-six more or less independent states, that each of these states has its own legislative body, its own administrative officials, its own political subdivisions and its own system of local government. A mere glance at the history of Germany-its former 192

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