Saskia Esken puts the dilemma of her SPD in a nutshell: “That is the fate of those who govern.” In a coalition it is also important to make compromises. Ironically, the former coalition partner, the CDU, brought a higher top tax rate into play in the person of Friedrich Merz. Something that SPD leader Esken would like to implement, but fails due to the veto of the current partner FDP. A tax reform is needed, higher incomes have to do more, says Esken.
In times of tight budgets and heavy burdens on the middle class, the tax debate broke out with force. However, the CDU guards against a false impression. The SPD is currently trying to “reframe us into a tax-raising party,” according to the CDU headquarters on Monday. In order to achieve this, the SPD would illegally single out one point from party leader Merz’s proposal and suppress all other points.
Merz had it Frankfurter Allgemeine Sunday newspaper among other things: “Even people who earn just a little more than average experience an enormous burden from duties and taxes. We have to flatten the burden curve, because performance must be worthwhile. Whether the top tax rate is then 42 or 45 percent, is not crucial.”
Merz breaks away from the Merkel-CDU course
With his statement, Merz actually distanced himself from the course of the Union in the last years of Angela Merkel’s government. At that time, the CDU was: We don’t even think about raising taxes. That was also an act of self-assurance. In the grand coalition, the feeling had spread among the party base that the CDU was betraying many of its positions – for example on migration issues, conscription or the nuclear phase-out. The categorical rejection of every tax increase, no matter how small, or the deviation from the black zero was an identity-establishing bracket.
However, the waiver of tax increases also reduced the CDU’s room for manoeuvre. For this reason, the responsible basic program committee recommended a change of course in April. And this commission – headed by Jens Spahn – had linked a possible increase in the top tax rate to strict conditions. At the same time, the solidarity surcharge must be completely abolished and the top tax rate only applies to higher incomes than before. Merz took up these considerations on Sunday.
The Minister of Finance sees “tax justice in trouble”
The SPD leadership has also set up a commission (“Taxes and Finances”) that is to present proposals by the federal party conference in December. The reintroduction of wealth tax is also up for debate. The Young Socialists are also insisting on suspending the debt brake in order to be able to invest more in areas such as education, social housing and digitization in view of the threat of industrial companies leaving Germany. But that also fails because of the FDP.
SPD General Secretary Kevin Kühnert gratefully accepted the Merz statements. The SPD wants to relieve the majority of employees, but in return “moderately increase” the top tax rate for the top five percent, according to Kühnert. In view of the AfD soaring high, there is great pressure in the SPD to make progress on distributive justice after coalition projects such as citizen income or the increase in the minimum wage have been processed. First comrades concede that such reform steps would be easier to push through in a grand coalition.
In any case, the FDP vehemently rejects an increase in the top tax rate. “The calculation of a revenue-neutral flattening of the middle class belly does not work. The burden at the top tax rate would not be 42 or 45 percent, as Mr. Merz believes, but 57 percent from 80,000 euros. If he knows the real numbers further on the side by Mr. Kühnert, I would be surprised,” says FDP leader and finance minister Christian Lindner Süddeutsche Zeitung. He accuses the Union of pursuing increasingly anti-business policies.
“The CDU wants to block the tax relief of the Growth Opportunities Act, but at the same time Friedrich Merz wants to increase the top tax rate,” says Lindner. The CDU leader is “positioning himself to the left of the SPD – that’s not good news for medium-sized companies”.
CDU General Secretary Carsten Linnemann vehemently rejects this criticism. “Meanwhile, the middle class pays the top tax rate, that’s just not fair,” says Linnemann. Fueled by the high inflation rates, “tax justice in Germany is getting into trouble”. The central element of a tax reform must therefore be “broad relief for the center of this country”. To do this, the middle class belly must first be flattened. The top tax rate should therefore take effect much later than around 63,000 euros. If it were only raised at 80,000, 90,000 or 100,000 euros, “there would be relief for the broad middle of this country”. With such a reform, only “a few top earners in the millions” would be burdened slightly more.