hoven, who heads the Mittelstand's trade association. Similar objections were raised by Horst Siebert, president of the Institute for World Economy in Kiel, who argued that while the reforms were "a step in the right direction" the different tax treatment of big and small companies was likely to create unpredictable distortions.

One debatable question about the reforms, which are likely to cost the government $21 billion over five years, is how Eichel plans to make up for the fall in tax revenue. Surprise again: the Social Democrats and their Greens partners have become disciples of Reaganesque supply-side economic theory. Apart from a one-time sale of state property to finance some of the cuts, the government hopes that the cuts will put more money in both personal and company pockets. Increased spending will prime the economic pumps and tax revenue will rise. If the government can succeed at that, Schrìder can shrug off the criticism from the Mittelstand and hope that he will prove as popular as Reagan was in his day.

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COPYRIGHT © 2000 TIME INC. NEW MEDIA

January 17, 2000

COVER STORY

Debt Easy
As Europeans lose their inhibitions about borrowing, finance companies will step up efforts to sell you revolving credit

The Unkindest Cut
Sliding down the slippery slope of consumer credit

Paying the Piper
The increasingly long arm of debt collectors

On Borrowed Time
The credit card spending that fuels the U.S. economic boom can't continue

EUROPE

Warpath to Power
Vladimir Putin's swift rise to the Russian presidency is threatened as his "victorious little war" stalls in the ruins of Chechnya's capital

Two Heads, Two Faces
Post-Yeltsin Russia may have a good-guy, bad-guy kind of leadership

Schröder's Taxing Time
The German Chancellor's tax reforms have helped boost his popularity, but opposition is mounting

A Nordic Nightmare
Two trains collide head-on in Norway, leaving 19 dead and many unanswered questions

Croatia Votes For Change
Tudjman's death prompts electoral rout for his party

AFRICA

Africa's "Good Coup"
Residents of Ivory Coast welcome the military's overthrow and exile of an authoritarian President

YOUR MONEY

On the Right Track?
The popularity of index tracker funds has sparked debate among investors

SCIENCE

Time Travelers on Ice
Kew Gardens' new seed bank aims to insure at least 24,000 plant species against extinction

DEPARTMENTS

World Watch

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