Equivalence principle

In economics, the equivalence principle describes the equivalence of performance and consideration. This basic principle is particularly important for insurance companies and as a taxation principle.

The benefits of an insurance must match the contributions and the amount of the contributions depends on the actuarial probability of the occurrence of the damage. Some taxes are based on the principle of equivalence with state benefits or are seen as compensation for state costs.

Wer einen Vorteil von der staatlichen Leistung hat, soll in diesem Rahmen Steuern zahlen. Dieses Prinzip wird als Begründung auch für die Erhebung etwa der Property tax herangezogen, welche die Kosten der Erschließung decken soll, oder der Mineralölsteuer, die zumindest einen Teil der Kosten des Straßenbaus decken soll.

Further explanation:

The principle of equivalence is a measure of the fair remuneration of the seller. According to this, the remuneration is relatively fair if the income differences between the individual employees correspond to the respective requirements and performance.
The requirements for salespeople in the field depend on the workplace or sales area. They are all the higher

the larger the area to be worked,
the greater the number of customers to be looked after,
the higher the proportion of large customers,
the greater the number of competitors,
the higher the market share of the competitors,
the more extensive the range and the more explanation it needs to be.

The performance of the individual salespeople in the field service is measured primarily according to the turnover and contribution margin they have achieved. In contrast, the internal sales staff who are responsible for processing orders normally receive a fixed salary. The different remuneration in the office and field service is a major cause of interpersonal tension.

The relatively high income of the salespeople in the field service causes dissatisfaction among the colleagues in the back office, which disrupts cooperation. In order to improve the cooperation between the two areas, performance-based remuneration should also be introduced in the office. This could be done, for example, in the form of a team commission, with the office staff receiving a certain percentage of the variable income of the field staff.

In order to promote teamwork in sales even more, the income of the sales manager should also be linked to the commission of the sales force.
The remuneration of the seller should also correspond to the equivalence principle in comparison to the competition. If the amount of the remuneration is perceived as unfair by the employees, their performance and thus the satisfaction of the customers decrease. This increases the risk that efficient salespeople and good customers will migrate to the competition.

In tax law:

According to the principle of equivalence, the tax is understood as the price that has to be paid for state or municipal services. This is based on the benefit (value, benefit) corresponding to the service or on the costs incurred. Addressees are the individual taxpayers (individual equivalence) or a group of taxpayers. The equivalence principle is still used as a justification for real taxes. But it only has a subordinate meaning.

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