Lindner defends his new tax plan: left-wing finance expert sees it as a "joke"

Created: 08/12/2022 05:34

By: Marcus Mäckler

The Minister of Finance wants to relieve the citizens of the high inflation.

He says that the “broad middle of society” will benefit from his plan, but there has been a lot of criticism – including from his own coalition.

Munich – Christian Lindner has prepared an impressive number for this performance.

If politicians do nothing, 48 million citizens are threatened with a “massive secret tax increase” next year.

The finance minister stressed on Wednesday morning that he was assuming an additional ten billion euros.

In times when life is becoming more and more expensive, that is "not fair".

Lindner says this against the background of “cold progression”, the effects of which people are feeling more and more clearly: In many cases, high inflation eats up wage increases.

However, because employees earn more in absolute terms, they slide into the next tax rate when in doubt.

So they have to pay more taxes without their purchasing power increasing.

Lindner wants to counteract this.

Lindner explains new tax relief: the tax rate for the rich should remain untouched

Specifically, the basic allowance is to be increased, i.e. that part of the income that is tax-free.

It is 10,347 euros and is expected to rise to 10,632 euros next year (from 2024 to 10,932 euros).

The adjustment is legally intended, but Lindner also wants to shift the other limits, up to the top tax rate of 42 percent.

It is currently due from an income of 58,597 euros, from 2023 the limit should be 61,972 euros, from 2024 at 63,515 euros.

Lindner only wants to leave the wealthy tax rate (45 percent from 277,826 euros) untouched.

Unlike his predecessor at the time - Chancellor Olaf Scholz - as Lindner emphasizes.

Finance Minister Christian Lindner explains his tax plans.

© Kay Nietfeld/dpa

The unsubtle spike suggests that the finance minister's plan is controversial even within his own government.

The Greens in particular are at odds.

Group Vice President Andreas Audretsch said, for example, that top earners "benefit three times as much as people with low incomes".

SPD faction deputy Achim Post also called for improvements, such as direct payments to people with low and medium incomes.

Left finance expert Christian Görke called Lindner's plans a "joke", the bottom 70 percent of the population went almost empty-handed.

The economist Marcel Fratscher is also critical.

Lindner's draft law sets the wrong priorities because it hardly relieves low earners, even though they feel inflation the most.

"Broad middle of society" should benefit from taxes - low earners go almost empty-handed

Lindner does not accept that.

On Wednesday he keeps talking about the "broad middle of society" that benefits.

Who is right is a matter of interpretation.

In absolute figures, there is really hardly anything for low earners, as shown by calculations prepared by tax expert Frank Hechtner from the University of Erlangen-Nuremberg for the

.

Anyone who earns less than 1000 euros as a childless single does not benefit at all.

Even single parents on low wages would hardly be relieved because they pay little or no income tax.

The higher the income, the higher the possible relief.

The picture changes if, like Lindner, one compares the absolute relief to the tax revenue.

In percentage terms, according to Hechtner, single parents with less than 1000 euros gross are particularly relieved with 36 percent, those with 7500 euros only with two percent.

Lindner gives the relief at an average of 193 euros per year.

He also argues that those who have little money will be supported differently, for example by the planned housing benefit reform.

The plan also includes an increase in child benefit by a maximum of eight euros per child.

The child allowance, which favors high incomes, should also increase.

In view of the headwind, however, it is uncertain whether the plans will go through.