_ J.C. Kofner, economist, MIWI Institute. Munich, December 9, 2024.
Summary
This national-libertarian manifesto outlines three key reform approaches for Germany: Dexform, Decentralization, and Detaxation. Dexform advocates a departure from the centralized EU system toward a liberal European Prosperity and Interest Community that promotes national sovereignty and competition. Decentralization focuses on transferring political and economic competencies from the federal and EU levels back to states and municipalities to strengthen democratic structures and reduce bureaucracy. Detaxation proposes a radical tax reform, eliminating numerous taxes and transferring tax competencies to regional levels to streamline the state and relieve citizens.
Introduction
In recent years, technocratic elites at the federal and particularly the EU level have implemented alarming centralization of competencies—contrary to the spirit of Germany’s Basic Law and the federal principles that should define our country. Germany, shaped by over a thousand years of federal tradition, has consistently benefited from the autonomy of its regions and states. This structure has fostered economic dynamism and competitiveness, forming the foundation for the prosperity we enjoy today. However, the increasing shift of decision-making power to Berlin and Brussels threatens our freedom, ignores the will of the people, and undermines the democratic principles that define Germany.
It is time to restore the political and economic self-determination of our municipalities and states. Federal structures must be strengthened, and the principle of subsidiarity must be implemented consistently. Comprehensive re-federalization, accompanied by deep tax reform, is the key. Tax competencies must be returned to state and municipal levels to ensure proximity to citizens, freedom, and prosperity. Only in this way can we achieve a lean yet effective regulatory state that revitalizes competition among states and promotes regional dynamism. We must decisively reject the centralist power claims of elites and breathe new life into Germany’s federal tradition.
DEXFORM
A Liberal European Prosperity and Interest Community (EWIG) Instead of a Directive EU
The European Union (EU) in its current form is a bureaucratic behemoth that increasingly endangers freedom and prosperity in Europe. Centralism, dirigisme, and excessive interventionism characterize an institution originally founded as a beacon of hope for peace and economic cooperation. Yet this idea has long been perverted: instead of a partnership of sovereign states, we witness the establishment of a centralist super-bureaucracy trampling national sovereignty.
It is time to reject this misguided path and create a genuine alternative—a Liberal European Prosperity and Interest Community (EWIG). This new community would no longer be based on coercion and uniformity but on voluntarism, competition, and mutual respect. If necessary, Germany must even threaten to leave the EU to assert its interests and halt these misdevelopments.
The EWIG would rest on a lean, clearly defined framework of competencies. Areas such as the common market for goods, the customs union, and existing free trade agreements would be retained to promote economic cooperation within Europe. Cooperation in research and development, which ensures innovation and competitiveness, would also remain a key element.
However, a radical shift is required in other key policy areas. Border protection and migration policy must no longer be dictated by Brussels. These competencies belong to the equal cooperation of nation-states, which best understand their specific interests and challenges. The same applies to the internal markets for services, capital, and labor, which must be designed to reflect the economic priorities of all member states rather than being undermined by uniform mandates.
An authentic reform demands even more: Key areas such as monetary policy, agricultural policy, social policy, and industrial policy must be fully renationalized. The Euro has proven to be an economic drag, exacerbating inequalities between member states and threatening the competitiveness of many economies. National currencies and sovereign monetary policies are the only way to restore stability and growth in Europe.
Debt and fiscal policy must also no longer be steered by Brussels. Net transfers and a debt union disenfranchise sovereign states and unfairly burden productive economies. Instead, a return to fiscal responsibility that promotes prosperity and dynamism is needed.
The shared agricultural, energy, and climate policies are a bureaucratic and unrealistic threat to the competitiveness and sovereignty of nation-states. These must be replaced by national regulations better suited to local needs and conditions.
The vision of the EWIG is a partnership of sovereign states centered on freedom, citizen proximity, and prosperity. Instead of a bureaucratic nightmare imposing decisions from the top down, the EWIG stands for a return to a Europe of nations—a Europe that embraces its diversity as a strength and prioritizes competition over uniformity.
DECENTRALIZATION
A Federal Restart: Freedom through Reform of the Federal System
Germany requires a profound reform of its federal structure. The technocratic concentration of power and an overgrown federal bureaucracy have disrupted the balance between the federal government, states, and municipalities. It is time to restore federal order and end the centralizing grip on political and economic decision-making. A look at history—specifically the Wilhelmine Empire—shows how federal structures successfully contribute to prosperity and dynamism. At the same time, modern approaches such as the ideas of libertarian economist Dr. Markus Krall must be considered to create a lean and efficient state.
The core of this reform is to limit the responsibilities of the federal government to internal and external security, foreign policy, foreign trade, and a portion of fiscal policy. All other competences should be systematically shifted to the state and municipal levels. This reallocation of responsibilities would not only strengthen the autonomy of regions but also curb the excessive bureaucracy in Berlin.
A central element of this reorganization is the reintroduction of an independent national currency—the Deutsche Mark—under the oversight of the Bundesbank. This would be a crucial step toward securing monetary policy stability and reducing dependence on problematic EU developments.
At the heart of this reform is the abolition of numerous federal ministries whose competences would be better placed at the state level:
- BMWK (Federal Ministry for Economic Affairs and Climate Action)
- BMJ (Federal Ministry of Justice)
- BMAS (Federal Ministry of Labour and Social Affairs)
- BMEL (Federal Ministry of Food and Agriculture)
- BMG (Federal Ministry of Health)
- BMDV (Federal Ministry of Digital and Transport)
- BMBF (Federal Ministry of Education and Research)
- BMWSB (Federal Ministry of Housing, Urban Development and Building)
- BMZ (Federal Ministry for Economic Cooperation and Development): Development aid should be integrated into the Foreign Office, not maintained as a separate department.
Coordination between states would be ensured through effective mechanisms, so nationwide standards and joint projects can still function smoothly. This reform aims not only to strengthen the responsibility of the states but also to revitalize democracy, foster proximity to citizens, and ensure sustainable prosperity across Germany.
DETAXATION
Radical Tax Reform for a Lean State and Proximity to Citizens
With a tax burden exceeding 40%, Germany ranks among the most heavily taxed countries globally. Almost half of an average German’s income is consumed by taxes and social contributions. Companies face one of the highest corporate tax rates worldwide. Instead of empowering citizens and businesses to create prosperity through personal responsibility and performance, the state stifles them with a tax burden that serves as a significant brake on growth.
A streamlined government apparatus and the decentralization of powers to states and municipalities can only reach their full potential if accompanied by a radical tax reform. It is time to relieve citizens and businesses from the oppressive burden of taxes and levies and to establish a tax and financial system that puts the principle of subsidiarity into practice. Guided by the principle of the American Revolution, “No taxation without representation,” taxes must be levied where citizens have direct influence on how their resources are utilized—at the regional and municipal levels.
The proposed reform involves the complete abolition of numerous taxes and levies that heavily burden citizens and businesses in Germany. These include:
- Wage tax, assessed income tax, non-assessed profit taxes, solidarity surcharge
- Corporate, trade, and interim production taxes, withholding tax on interest and capital gains
- Import turnover tax and standardized import levies
- Insurance and fire protection tax
- Energy, electricity, and nuclear fuel taxes
- Motor vehicle and air travel taxes
- Tobacco, alcohol, coffee, sparkling wine, alcopop, beer, betting, and lottery taxes
- Inheritance, wealth, real estate transfer, and property taxes
Furthermore, existing tax regulations will be fundamentally revised:
- Customs duties and VAT will remain at the federal level.
- A new profit tax: Municipalities will have the authority to levy this tax, ensuring that all types of income (labor, capital, etc.) and only withdrawn profits are taxed uniformly.
- Social contributions: These will be transferred to the states.
The distribution of tax and levy shares will also be restructured. The federal government will receive a share of the profit tax but no more than 10%. States and municipalities will receive a share of customs revenues, not less than 10%. This will incentivize regions to manage their tax revenues effectively and in proximity to their citizens. Additionally, the tax and levy quota for the federal and state governments will be capped at 20% of GDP. Similarly, the public sector ratio will be limited to 20% of GDP, ensuring that the state focuses on essential functions.
Lastly, the debt brake will remain in place to safeguard financial stability and set a clear limit on public debt. This reform is a decisive step toward a functional, lean state that gives citizens and businesses room to breathe while simultaneously strengthening federal self-determination. The elimination of unnecessary taxes and the transfer of tax authority to states and municipalities will not only bring more freedom and prosperity to citizens but also restore confidence in political self-governance.