FDP proposes sweeping tax reforms to slash costs for Germans and businesses
The Free Democratic Party (FDP) has unveiled a new tax reform plan aimed at cutting costs for both individuals and businesses. Developed by Hermann Otto Solms, the party’s financial policy expert, the proposal seeks to reshape Germany’s tax system while keeping some existing measures in place.
Under the FDP’s plan, income tax would shift to a four-tier structure: 15%, 25%, 35%, and 42%. The highest rate of 42% remains unchanged, while the wealth tax of 45% for earnings above roughly €278,000 stays as well. Married couples would continue benefiting from joint taxation, known as Ehegattensplitting.
For businesses, the proposal reduces corporate taxes from the current combined burden of around 30% down to 20%. The party argues that these changes will encourage economic growth and create more jobs. Solms, an honorary chairman of the FDP, designed the reform to ease financial pressure on taxpayers while maintaining key revenue streams. The plan balances cuts with stability, ensuring some high-earner taxes remain untouched.
The reform keeps the top income tax rate at 42% and preserves the wealth tax for high earners. By lowering corporate taxes to 20%, the FDP aims to make Germany more competitive for businesses. The proposal now awaits further discussion and potential adoption.
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