As the name might imply, the Federal Republic of Germany has constituent states.
Federalism, of course, has many advantages. It keeps decisions closer to the people, allows laboratories for experimentation, etc. In theory most Germans agree with this, but when it comes to practical examples most of us get squeamish. Almost everything seems too important to be arranged in 16 different ways.
This leads to the states having much less legislative competences than the states of other federal countries. The Basic law reserves some questions (such as national defense) to the federation and some (such as schooling) to the states exclusively. But most questions are matters of concurrent legislation. This is basically what Americans know as the only kind of federal competence: Both the federation and the states can legislate, but where they conflict federal law prevails. In practice, the federation has exercised almost all concurrent powers. For example, almost all of civil and criminal law is federalized.
The most important legislative powers reserved to the states are on schooling and culture. But even there most Germans are weary of legal "patchwork". So the states organize into compacts to make their systems similar.
The other aspect of federalism is an institutional separation between the states and the federation, and we don't much care for that one either. For example, the income tax is fixed by federal law but collected by the states, with each sovereign getting half of the revenue. If I think the state tax office overcharged me, I can sue in a state court, but the looser can appeal to a federal one. Similarly, almost all crimes are created by federal law, but investigated by state police and prosecuted by state prosecutors in state courts. But if it's important enough, final appeal lies to a federal court. There are lots of exceptions, but the default pattern is that the states execute federal law.
The final aspect of federalism is the states' participation in federal government. In Germany this happen through the Bundesrat (Federal Council). The Bundesrat is almost totally dissimilar to the American Senate. It is composed of delegates of the state governments, that is of the executive departments. The states' votes are roughly staggered by population, but not quite proportional. States can't split their votes.
When it comes to competences, by default the Bundesrat has a veto the Bundestag (parliament) can override by simple majority. Since the government has a permanent majority in the Bundestag, that is just a formality. There are, however, very important exceptions needing active consent of the Bundesrat. The precise rules are very complicated, but the main grounds necessitating the Bundesrat's consent are amending the constitution, changing anything about taxes of which the states get (part of) the revenue, imposing financial burdens on the states, and prescribing the organization of the states's administrative bodies. If the states and the federation were as separate as their American counterparts these would be very rare exceptions indeed. But remember, in Germany the states mostly execute federal law, bearing the financial burden thereof. And often the federation will want to prescribe something about the organization of the agencies that will end up executing the law. So in practice, most important laws need the consent of the Bundesrat. Sometimes it's possible to separate the controversial part from the part needing consent and pass them separately. But often it isn't.
In practice, the state governments vote by party line. This is seen as one of their most important functions. To a large extent the states' general elections are seen as indirect elections of the Bundesrat delegation. And most of the time the majority of the Bundesrat is opposed to the majority of the Bundestag. While we can't get it between the legislative and the executive department, we do like installing divided government between Bundestag and Bundesrat. So more often than not, the need for consent of the Bundesrat reduces to the need for consent of the opposition.
I think my title sums it up: This is a fairly half-hearted federalism. Germans really don't identify with their home state anywhere as closely as Americans do with theirs. But if that's what we want, I wonder why bother with state parliaments that have very little power.
If it was up to me, I would try some disentanglement. The federal government should have to reimburse the states for anything it mandates them to do. That way federal law no longer could impose financial burdens on the states and one main reason for consent of the Bundesrat would disappear. On joint taxes, the states should be able to fix their own rates as a percentage of whatever the federation mandates for itself. That way the states could compete on taxes and service levels. In compensation the Bundesrat should loose its veto over the rest of the tax rules. The Bundesrat, which thus would loose most of its absolute veto power, should get a one-year suspensive veto on everything, like the British house of Lords. Also it should be changed to delegations of the states' legislatures, which should be elected by proportional representation and be allowed to split their votes. Finally, some areas of concurrent legislation should be returned to the states. Land titles, for example, are by definition local and thus should be regulated locally.
In reality, of course, it isn't up to me.
- Actually this last one was slightly relaxed in 2006. Now the federation can regulate administrative organization without consent of the Federal Council but the states can deviate from such law. If the federation wants to exclude the possibility of deviation that still needs consent. Statistically this has reduced the number of laws that need consent, but I suspect mainly for uncontroversial laws that would have passed anyway.↵