The SPD wants to relieve most citizens of their tax burden. But economists consider the election campaign maneuver to be difficult to finance.
The SPD is switching to election campaign mode: almost a year before the federal election, the party is presenting new tax plans with which it wants to win over as many citizens as possible. The declared goal: to relieve the burden on 95 percent of taxpayers.
The Social Democrats could urgently use a lot of support. Because in current surveys, the SPD and especially Chancellor Olaf Scholz are doing poorly. Read more about this here.
Can tax plans help with this? That certainly also depends on the exact design – i.e. how much more Germans would actually have in their pockets after the model. But that is exactly what cannot be determined so far, because the SPD has not yet provided a calculation. Economists are skeptical about this.
While the SPD federal chairwoman Saskia Esken said that the proposal had previously been calculated with tax experts, the statements made by the SPD’s financial policy spokesman, Michael Schrodi, sound a little more vague. “The concept was developed in coordination with tax experts. There is a lot of scope for design,” he tells t-online. In addition to justice, the goal is also “higher purchasing power for the majority of people,” because that strengthens the economy, Schrodi continued.
When asked, an SPD spokesman specified: “The political objective of a fundamental income tax reform, as formulated in the party executive’s resolution, is based on the resolutions of the SPD federal party conference in December 2023.” There are already calculations and various models for this. “This will be decided as part of the preparation of the program for the 2025 federal election. In this context, details will then be clarified and published.”
There were mixed reactions from the coalition. FDP leader Christian Lindner said he was there to help relieve the burden on taxpayers. But this should not come at the expense of skilled workers and medium-sized businesses. His suggestion: “We can finance this through further citizen’s benefit reform and the prevention of irregular immigration into the welfare state.”
The opposition expressed its opposition. CDU leader Friedrich Merz said on ARD that the SPD could have introduced its plans to reduce taxes in government over the past almost 20 years. “However, if that means at the same time that they want to place even greater burdens on the so-called higher earners, then our answer is clear and unequivocal: No. That is a burden for medium-sized businesses,” said Merz.
Meanwhile, economists are particularly skeptical about its feasibility. Martin Beznosk from the employer-related Institute of the German Economy (IW) tells t-online: “The burden on small and medium-sized incomes is historically high and the last reform was a long time ago. However, I think that the counter-financing, as proposed by the SPD, is not the case can work.”
In order to completely flatten the so-called middle class belly, i.e. the proportional additional burdens on middle incomes, it is estimated that up to 50 billion euros in taxes would be lost annually as state income. It would be difficult to finance this, says Beznoska. But even partial relief could have an “effect on work incentives for small and medium incomes”.
But even then, the economist is skeptical about how the SPD model is supposed to work. The goal is difficult to achieve with purely counter-financing through a high income tax for the “rich”.