German Chancellor Friedrich Merz of the Christian Democratic Union (CDU) has rejected proposals from the Social Democratic Party (SPD) to increase taxes on high earners and inheritances. According to remarks made to the “Machtwechsel” podcast with Dagmar Rosenfeld and Robin Alexander, Merz stated, “We are already at almost 50 percent if you add up the so-called wealth tax, which also makes a notch upwards, plus church tax and the solidarity surcharge. So I would say, you really can’t go any higher.” He likened the situation to having “squeezed the lemon pretty dry.”
Tax Debate Heats Up
The CDU is scheduled to discuss a plan at its party conference beginning Friday to raise the income threshold for the top tax rate. The SPD has indicated willingness to consider this, but in exchange, seeks a higher top tax rate overall. The SPD also intends to increase taxes on substantial inheritances.
Chancellor Merz has voiced concerns that further tax increases would disproportionately burden the middle class. He explained that many business owners operate as partnerships and pay income tax. “I strongly advise against increasing their burden any further,” he said.
Currently, the top income tax rate is 42 percent, applying to single individuals with a taxable income of 68,481 euros. An additional wealth tax of 45 percent applies to income exceeding 277,826 euros annually.
CDU General Secretary Carsten Linnemann has proposed raising the threshold for the top tax rate to an annual taxable income of 80,000 euros. This proposal has faced criticism from the Green Party and the Left Party.
Frequently Asked Questions
What is the current top income tax rate in Germany?
The current top income tax rate is 42 percent, applicable to single individuals with a taxable income of 68,481 euros.
What is the SPD proposing regarding inheritance taxes?
The SPD intends to increase taxes on very large inheritances.
What is the CDU’s proposed change to the top tax rate threshold?
CDU General Secretary Carsten Linnemann has proposed raising the threshold for the top tax rate to an annual taxable income of 80,000 euros.
As the CDU and SPD negotiate, it remains to be seen whether a compromise can be reached, or if these differing positions will lead to further political friction.
