Finance Minister Proposes Relief for Lower-Income Earners - Germany's €37B Tax Relief Plan Could Lift 20M Workers' Take-Home Pay
Brandenburg's outgoing Finance Minister Robert Crumbach has unveiled a major tax relief plan for low and middle earners. The proposal, costing €37 billion annually, would lift the tax-free allowance to €26,400 a year. Crumbach is now set to take on a new role as infrastructure minister in the upcoming red-black coalition government.
The plan would remove income tax for anyone earning up to €26,400 gross per year. A married couple with two children on that salary would save €4,470 annually, while a single parent with one child would keep an extra €1,174. Around 20 million taxpayers across Germany would see their take-home pay rise under the scheme.
Crumbach also wants to widen the gap between basic welfare benefits and net wages. To fund the changes, he proposes merging the top income tax rate with a new wealth tax surcharge. However, the idea has not yet been discussed with the CDU, the SPD's likely coalition partner. The CDU has long resisted wealth tax increases, having pushed for its abolition in the 1990s. The party also backed corporate tax cuts, reducing the rate to 15% in 2008, with further reductions planned from 2028. Crumbach's departure from the finance ministry leaves his successor, Daniel Keller, facing tough financial challenges. Brandenburg's budget is already under strain, with billion-euro deficits expected in the coming years.
The tax relief proposal would bring significant savings for millions of workers if approved. But its future depends on negotiations with the CDU, which has opposed wealth tax hikes in the past. Meanwhile, Keller will inherit a difficult financial situation as the new finance minister.
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