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April Fool’s It Is Not

Today, on April 1, I found out, to my surprise, that there is a law in Germany saying that in companies with 20 or more employees severely handicapped people have to make up at least 5% of the workforce. If companies do not comply, they have to pay a “Ausgleichsabgabe” (compensation levy) between 105 and 260 Euros per month per unfilled position. So, that amounts to 1260 to 3120 Euro per year for a company with 20 employees.

Economically speaking, this is of course nothing else than a tax on companies to pay for a social redistribution of income to the severly disabled. As the productivity of these people is certainly much lower than that of healthy people, it would make more sense to pay a subsidy to companies for hiring disabled people. The subsidy, which would have to be equal to the productivity difference between healthy and severly disabled employees, would reduce the cost / increase the profit for the company. A levy, however, that is decreed as a kind of punishment to companies who do not comply with a law, does nothing to improve the job opportunities for severly disabled people. Most, if not all for-profit-companies, will simply refuse to hire them and instead pay the levy. The levy would have to be absurdly high (probably higher than the average wage in a given company) in order to coerce the company to employ severely disabled people.

From an ethical point of view, there is probably nothing wrong with such a tax. However, what bugs me is, why do only companies have to pay this levy? If we are supposed to be a social and civilized society, all taxpayers should pay this levy. Besides, as I have written before, taxes on companies are really nothing else but taxes on employees. It’s just a political game to make employees believe that the “fat cats” pay for the just and social things. It’s a political crusade to make companies, i.e. capitalists!!, pay for social projects.

Again, there’s nothing wrong with the idea to help the severely disabled in our society. But the way we do it could certainly be improved if it were not for populist policies.

I wonder if there is a similar law in the US.

HT @ Kantoos

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