This week, the coalition leadership intends to agree on a reform of the income tax. Those with small and medium incomes are to be relieved, as stated in the coalition agreement. Around 500 euros more net from gross per year should remain for this group, Finance Minister Lars Klingbeil has promised. However, this costs money, and to balance the budget, the government must already draw on reserves from previous years. The SPD therefore wants to burden top earners more heavily to finance the tax reform, while the Union fears this will burden the economy.
A ZEW paper proposes a model that limits costs and strengthens work incentives. A jump solution in the tax tariff is being discussed to avoid scatter losses. The reform could create 50,000 to 60,000 new full-time jobs, but fiscal costs remain. The coalition summit could last until the end of the week, with various models being discussed.
Source: www.zeit.de
