Finance Minister Christian Lindner has defended his plans to reduce the so-called cold progression in income tax against criticism from the coalition partners SPD and the Greens. At the same time, the FDP leader announced that he wanted to leave the limit for the maximum rate of income tax unchanged. "Unlike my social-democratic predecessor, I would not change the basic value of the tax on the wealthy," Lindner told the "Handelsblatt".
The taxes increase the higher the income - the top tax rate is 42 percent. For top earners, however, there is still a maximum rate of 45 percent, the so-called rich tax. It currently applies to taxable income of just under EUR 278,000.
Criticism from SPD and Greens
Cold progression is a kind of creeping tax hike, when a pay rise is eaten up by inflation but still results in higher taxation. Politicians from the SPD and the Greens had criticized that Lindner's plan to eliminate this effect primarily supported the highest earners.
Instead, direct payments such as a family allowance are the best way to specifically relieve small and medium-sized incomes, said SPD parliamentary group leader Achim Post of the German Press Agency. “High incomes would benefit particularly strongly from a complete dismantling of the cold progression.” The fact that Lindner does not want to tighten the tax on the wealthy can only mitigate this in part.
The Minister of Finance opposed this. "The opponents are taking the middle of society hostage because they want to burden the IT specialist, the heart surgeon and the entrepreneur," he said. He regrets the "at times class-struggle tone in the debate". Small and medium incomes benefited the most in relative terms from a change in the rate of pay.
According to the report, the Minister of Finance is assuming a high single or low double-digit billion contribution in his proposal for a lack of revenue for the federal government. "In the draft budget for 2023, I made provision for this measure," he said.
Social Association Germany: Lindner's refusal "scandalous"
The Social Association Germany (SoVD) described it as "scandalous that Finance Minister Christian Lindner consistently refuses to ask people with very high incomes to pay more in order to finance the urgently needed relief for poorer people". Private wealth must be used more to finance public services, said association president Adolf Bauer. In order to adequately participate in high and highest incomes and wealth, significant changes in the applicable tax law are required, "in particular the re-imposition of wealth tax and the increase in top tax rates."
