Abstract
Abstract Five eras of multilevel public finance are discussed: the German Kaiserreich, the Weimar Republic, the Federal Republic of Germany and the European Union before and after the euro crisis. Multilevel systems can work efficiently as long as they are organized according to the principle of institutional congruence where the circles of beneficiaries, decision makers and tax payers coincide. Systems of institutional incongruence, in contrast, are prone to cost shifting and long-run unsustainability. Their dynamics often end in a deadlock in which citizens opt for a unitary state dispensing them from the burden of choice without providing them a stable budget.
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