(de-news.net) – The Federal Government is arguing about plans for tax relief. FDP chairman Lindner accused the Greens of blocking plans and not supporting the mitigation of the bracket creep. The Greens, for their part, complained that Lindner did not support the increase in the contribution assessment limits in social insurance. A bracket creep indicates that the tax system is not adjusted to inflation, with taxpayers moving into a higher tax class with their increase in wages. “The state must not enrich itself at the expense of its citizens,” said FDP General Secretary Djir-Sarai. The Greens now see increases in contributions to health and pension insurance if Lindner rejects the higher calculative values in social insurance.
Differences regarding social security contributions
Budget expert of the CDU/CSU parliamentary group, Middelberg, accused the FDP of participating in an increase in social contributions. Real relief would not come from adjustments against bracket creep, but only from maintaining purchasing power. The Ministry of Labor assumes a wage growth rate of around 6.4 percent for 2023, which represents an unusually strong increase. Higher earners would have to pay a much higher fee if the contribution assessment limits are raised and a larger proportion of wages are subject to social security contributions. SPD parliamentary group leader Mützenich called on Lindner to further increase child benefit so that there is a greater spread between child benefit and child allowance and named a “substantial relief package” as the goal of the SPD faction in the Bundestag. With the current recession, “bold” steps should be taken – especially in favor of the energy-intensive industry.
According to Lindner’s plans, the basic tax allowance should rise by 312 Euros to 12,096 Euros in the new year, to 12,348 Euros in 2026, while the child allowance should be increased by 60 Euros to 6,672 Euros in 2025 and to 6,828 Euros in 2026. “It is a matter of fairness to relieve the burden on the working population,” Lindner explained. He emphasized that he has the support of the Chancellor for this. There should be a noticeable difference between income from work and the social benefits paid. FDP General Secretary Djir-Sarai firmly rejects the SPD’s latest tax plans. “Nowhere are the taxes and burdens for people, for businesses, for companies as high as in Germany,” he emphasized. SPD leader Esken is opting for an increase in the top tax rate, the tax on the rich and a reintroduction of the wealth tax provided for in the Basic Law.
An ‘Agenda 2024’ against tax burdens?
Gesamtmetall President Wolf has meanwhile called for an Agenda 2040 and justified this by saying that Germany is in a structural crisis. Energy prices, social security contributions and corporate taxes are too high, working hours in the metal industry are too short and bureaucracy is too extensive.
The traffic light parties have agreed that the annual tax law should contain improvements with a view to capital investors and parents of children requiring care: the restriction on loss offsets in futures transactions should be removed. Previously, speculation on raw materials, currencies or other underlying assets could only be offset against other capital gains up to a volume of 20,000 Euros, which the Federal Finance Court criticized in June. According to FDP parliamentary group vice-chair, Meyer, the special loss offset restriction for futures transactions and bad debts in private assets was probably unconstitutional. The deductibility of childcare costs is to increase by up to 800 Euros. The annual tax law includes further detailed regulations.
Division on the debt brake
Economics Minister Habeck (Greens) said he is committed to ensuring that companies can benefit from tax exemptions. He also wants to reform the debt brake. Lindner, on his part, is sticking to the debt brake. In contrast to the SPD, he sees no scope for change in this regard. According to a thesis paper by the Bundestag parliamentary group, the debt brake is to be suspended. A ‘Germany Investment Fund’ for the Federal Government, states and municipalities is to “break through” the investment backlog. The Greens want to create large-scale incentives for private investment in future technologies, for example in the areas of solar, wind, hydrogen, batteries and more energy-efficient and digital processes as well as the rail network. “The fund will also enable the construction of the hydrogen network,” the paper says. The Greens also want a ‘Germany app’ that will provide simplified access to all federal, state, and local services. Finally, electricity from privately operated solar systems should be made easier to use.
More ease for investment transactions
Meanwhile, the traffic light parties have agreed that the annual tax law should contain improvements with regard to investors and parents of children requiring care: the restriction on loss offsets in futures transactions should be removed. Previously, speculation on raw materials, currencies or other underlying assets could only be offset against other capital gains up to a volume of 20,000 Euros, which the Federal Finance Court criticized in June. According to FDP parliamentary group vice-chair Meyer, the special loss offset restriction for futures transactions and bad debts in private assets was probably unconstitutional. The deductibility of childcare costs is to increase by up to 800 Euros. The annual tax law includes other detailed regulations.
Demands to modernize the infrastructure
Habeck is committed to ensuring that companies can benefit from tax exemptions. He also wants to reform the debt brake. Lindner is sticking to the debt brake. In relation to this, he sees no scope for change, unlike the SPD. According to a paper by the Green party’s Bundestag faction, the debt brake is to be suspended. A ‘Germany Investment Fund’ for the federal government, states and municipalities is intended to “break through” the investment backlog. The Greens want to create large-scale incentives for private investment in future technologies, for example in the areas of solar, wind, hydrogen, batteries and more energy-efficient and digital processes as well as the rail network. “The fund will also enable the development of the hydrogen network and investments in digitalization,” the paper says. The Greens also want a ‘Germany app’ that enables simplified access to all federal, state and municipal services. Finally, electricity from privately operated solar systems is to be made easier to use.
Political restraint as to the minimum wage required
In the interim, the traffic light government’s decision to raise the minimum wage to 15 Euros has been criticized by leading economists. The head of the employer-friendly German Economic Institute, Hüther, criticized this and also called for an expansion and modernization of the infrastructure. “Investment support through a super depreciation or direct bonus, which was already provided for in the coalition agreement and the Growth Opportunities Act, is acceptable,” according to his expert assessment. A higher minimum wage, the Collective Bargaining Act and the Pension Package II are social democratic “traditional issues,” but not sufficiently justified. In contrast, Ifo boss Fuest praised solutions that the SPD supports with a view to more economic growth, more investment in public infrastructure and tax relief for the middle class. “Higher taxes on taxpayers with the highest incomes will, however, affect medium-sized companies,” he warned. With regard to the demand for a statutory minimum wage of 15 Euros, however, the SPD is “transgressing the promise made by its own representatives to keep the minimum wage out of election campaigns and to leave the issue to the Minimum Wage Commission,” Fuest concluded.
Thorsten Koch