It was to be expected that Christian Lindner would not simply accept the scolding of the so-called business wise men without comment. On Wednesday, however, it was not only the Federal Finance Minister himself who spoke up. Rather, the economics department of his house also set out to dissect the recommendations of the Council of Economic Experts point by point. Result: From the point of view of the ministry experts, the temporary tax increases for top earners proposed by the professors would not only make little sense, but would even be counterproductive.
In their annual report, the “wise men” certify that the government has put together extensive relief packages in the fight against high inflation. However, many measures have also benefited people who do not need any help at all. In order to achieve more target accuracy, “a compensating supplement” is therefore conceivable, for example in the form of a temporarily higher top tax rate or an energy solidarity surcharge for those receiving very high incomes.
The problem now is that tax increases are exactly what Lindner and the FDP have categorically ruled out for years. The reaction of the minister and party leader was correspondingly clear. “We are in a phase of economic uncertainty – additional tax burdens would be extremely dangerous,” he said. Even and especially top earners already contribute considerable sums to the financing of the common good.
Instead of raising taxes, the coalition wants to slightly reduce the burden on high earners. With the Inflation Compensation Act, in addition to the basic and child allowances and the other benchmarks of the income tax rate, the earnings limit is to be raised in two steps, above which the well-known solidarity surcharge becomes due. For single people, this would mean that they would only be subject to solidarity payments if their taxable annual income exceeded 66,915 euros. So far, the threshold is 62,604 euros. This step ensures that 90 percent of taxpayers will be exempt from the surcharge in the future, according to Lindner.
From the point of view of his economists, the economy can only be stabilized in the crisis by relieving “the broad spectrum of society”. Losses in real income would not only affect low-income earners, but also otherwise high-income groups. As an example, the experts cite a young family that has just started to finance their own home.
In addition, from her point of view, the 200 billion euro shield against energy price peaks will be paid for through debt and ultimately through taxes. This means that high earners are already significantly involved in the financing even without a higher top tax rate. Moreover, an increase would by no means only affect the rich, but “middle of society and companies”, since the top rate currently applies to taxable income of 58,600 euros. The development of additional production capacities is also important in the event of persistent supply bottlenecks and sharply rising prices. In order to achieve this, however, attractive framework conditions for innovations and investments are required.