For non-working members of the labour force, the incentives to take up employment were limited by the high-level marginal burden imposed by taxes and other public levies. Most types of household in Germany have a marginal burden of taxes and levies of 50% or more. In other words, from every additional euro that is earned, around 50 cents are deducted.
This makes it attractive for a company to use more debt financing and less equity capital than would be desirable from a social point of view. Of course, this distortion exists for non-financial corporations as well.