Germany's conservatives warm to higher top income tax in reform push
Germany's conservative Union bloc is now open to raising the top income tax rate as part of a wider tax reform. The shift comes after years of resistance and aligns with demands from the SPD to ease the burden on lower and middle earners. A new report by Handelsblatt has revealed growing support among Union politicians for the proposal.
The Union (CDU/CSU) had long opposed increasing the top tax rate beyond 42%. But recent discussions suggest a change in stance, with key figures now viewing it as a potential compromise. Chancellor Friedrich Merz (CDU) and Finance Minister Lars Klingbeil (SPD) are leading talks within the Ampel coalition to push forward reforms.
Tax expert Stefan Bach, from the German Institute for Economic Research (DIW), proposed raising the rate to 49% for annual incomes above €90,000. His plan also includes scrapping the solidarity surcharge and smoothing out the 'middle-class bulge'—a tax bracket that disproportionately affects moderate earners. Union politicians have responded positively, seeing it as a foundation for further negotiations.
Fritz Güntzler, the CDU's financial policy spokesman, called the proposal a useful starting point. He supports broader reforms, including budget cuts and phasing out subsidies, but opposes new levies like a wealth tax or stricter inheritance tax. Florian Dorn, a CSU lawmaker, also backed the idea, arguing it could lead to bold income tax changes.
Sources within the Union's leadership confirm openness to dialogue, signalling a potential breakthrough. The reform would mark a significant shift, balancing relief for most taxpayers with higher contributions from top earners.
The proposed tax reform could reshape Germany's income tax system by easing the load on middle earners while increasing rates for the highest incomes. If approved, it would end the solidarity surcharge and address long-standing issues like the 'middle-class bulge'. Negotiations between the Union and SPD are now underway to finalise the details.
Read also:
- American teenagers taking up farming roles previously filled by immigrants, a concept revisited from 1965's labor market shift.
- Weekly affairs in the German Federal Parliament (Bundestag)
- Landslide claims seven lives, injures six individuals while they work to restore a water channel in the northern region of Pakistan
- Escalating conflict in Sudan has prompted the United Nations to announce a critical gender crisis, highlighting the disproportionate impact of the ongoing violence on women and girls.
