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Christian Lindner's tax plans could bring a lot to top earners

2022-07-28T11:08:47.433Z

The cold progression can eat up a pay raise through rising taxes. Finance Minister Lindner is looking for a remedy - a model calculation shows who would probably benefit.



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Minister of Finance Christian Lindner (archive photo from 2021)

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Tobias Schwarz / AFP

The tax cuts proposed by Finance Minister Christian Lindner (FDP) could be especially beneficial for top earners.

This is the result of a model calculation by the Bremen Chamber of Labor.

A single person with a gross annual income of 600,000 euros would pay a good 1100 euros less in taxes.

In contrast, a family of four with a gross annual income of EUR 40,000 would only save a good EUR 300.

Lindner has announced the reduction of cold tax progression for 2023.

The term describes the effect that someone slips into a higher tax rate due to a wage increase that only compensates for inflation and thus ultimately has less money in their pocket.

The Federal Ministry of Finance defended the project.

Lindner has not yet given any details about the project, so the model calculations should also be treated with caution.

In the calculations by the Bremen Chamber of Employees, an increase in the benchmark tariff values ​​of six percent was assumed - this would mean, for example, that the basic tax-free allowance would rise by six percent, as would the limit from which the highest tax rate applies.

The »Süddeutsche Zeitung« first reported on the model calculation.

Single parents save only 100 euros

With a shift of six percent, a single person with a gross income of EUR 100,000 would pay a good EUR 600 less.

A childless couple with 600,000 euros gross should even expect a good 1700 euros relief.

In contrast, a single parent with an annual salary of EUR 20,000 would only benefit from a reduction of almost EUR 100.

Tax breaks relieved »above all high earners«, explained the chief executive of the Chamber of Employees, Peer Rosenthal.

The parliamentary state secretary in the Federal Ministry of Finance, Katja Hessel, however, told the AFP news agency that compensating for the cold progression was “a requirement of fairness towards the hard-working middle class in our country”.

It's not about "any kind of tax gifts," said the FDP politician, but in view of the high inflation about "preventing a massive tax increase".

Even in the "normal middle class" there are "many people who now have to calculate more precisely what they can still afford" because of the wide price increases," said the State Secretary.

"It is therefore urgently necessary for social and societal cohesion in our society to provide broad relief: both low-income earners and the broad middle - the best way to do this is to compensate for the cold progression."

Chamber of Labor demands direct payments

Most tax breaks reduce the burden the more tax is paid beforehand.

The Bremen Chamber of Labor believes that direct payments make more sense.

The organization explained that around twelve million taxpayers had such a low income that they would not benefit at all from a reduction in cold progression.

This group, on the other hand, would certainly benefit from direct payments.

"Those on low incomes need direct financial support," explained Rosenthal.

The SPD member of the Bundestag Michael Schrodi told the "Süddeutsche Zeitung" that further relief was necessary.

»But we have to help those who need it most.

600 euros bring a low earner more than a high earner.«

mamk/AFP

Source: spiegel

All business articles on 2022-07-28

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