Germany's Tax Reform Sparks Debate Over Middle-Class Relief vs. Wealthy Gains
It's a classic Smithers move by Carsten Linnemann (CDU). Channeling his inner assistant to the ultra-wealthy Mr. Burns from The Simpsons, he's calling for the top income tax rate threshold to be raised—not kicking in at €68,000, as it does now, but only at €80,000.
First off, the numbers Linnemann is tossing around are simply wrong. They're based on 2025 projections. Normally, when inflation drives up wages, the average tax rate climbs too, boosting income tax revenues—a phenomenon known as bracket creep. To prevent workers from being pushed into higher tax brackets just because their pay rises with inflation, Germany adjusts its income tax schedule at the turn of each year. Even top earners benefit from this—meaning the threshold for the highest tax rate has already risen to around €70,000. Somehow, that detail seems to have slipped past Linnemann.
Beyond that, his justification—that this would "flatten the middle-class bulge"—is nonsense. In the income distribution curve, that bulge now sits somewhere around knee level. The reason? For years, Germany's social safety net has been steadily unraveling, with redistributive policies losing their grip. Welfare benefits and pension levels have lagged behind wage growth for decades. So when Linnemann, in the same breath, pushes to cut social security contributions, it's mostly one thing: hypocritical. A thinly veiled nod to policies that favor the wealthy at the expense of fair distribution. As Smithers would say: Yes, Sir.
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