On Sunday, the coalition leadership will meet at the Chancellery – in a very small circle. Only Chancellor and CDU leader Friedrich Merz, CSU leader Markus Söder, and the two SPD co-chairs, Bärbel Bas and Lars Klingbeil, will attend. The focus is on the planned tax reform, which is to take effect on January 1, 2027. Time is running out.
Next Wednesday, the federal government intends to fundamentally decide on the major reform projects in the coalition committee: taxes, pensions, health insurance, and long-term care. By the summer break in mid-July, the large reform package is to be finalized. It is also expected to include labor market reforms and bureaucratic reduction.
In the coalition agreement, the CDU/CSU and SPD agreed to “reduce income tax for small and middle incomes by the middle of the legislative period.” The coalition partners seem to agree that the top tax rate of 42 percent should start at a higher income, for example at 100,000 euros, instead of the current threshold of just under 70,000 euros.
But the question of how to finance the reform remains open. Unlike the Union, the SPD wants to finance the tax reform through taxes and burden higher incomes more heavily. An increase in the top tax rate, a higher inheritance tax, or an increase in the so-called wealth tax are conceivable for them.
Currently, the wealth tax applies from an income of around 278,000 euros and stands at 45 percent. An increase could mean either a higher tax rate or a lowering of the income threshold.
No tax increases – that has been the Union’s credo so far. But given the gaps in the budget, several Union politicians have recently signaled concessions on the wealth tax. That would mean the SPD has prevailed on this point. However, the Union rejects an increase in inheritance tax.
For the CDU/CSU, the tax reform does not have to be revenue-neutral. They want to relieve as many taxpayers as possible, also to stimulate the economy.
Unlike the SPD, the Union can also imagine financing the tax reform outside the tax system. Union parliamentary group leader Jens Spahn recently proposed cutting subsidies by a flat five percent using the “lawnmower method.” Whether that is fair and affects all social groups equally is controversial.
“We need to get the economy moving,” says Bundesrat President Andreas Bovenschulte (SPD). “The crucial thing is that the tax reform comes now.”
The federal government is under pressure and must deliver. In the fall, elections will be held in Saxony-Anhalt, Mecklenburg-Western Pomerania, and Berlin. The poll ratings for the governing parties are in the basement. Black-Red must present results and show that the coalition in Berlin is capable of acting.
In the middle of the week, it almost looked that way. After the pension commission presented its recommendations for a reform, h
Source: www.zdfheute.de
