Union's 'Performance Pays' Plan: Tax Exemption for Overtime Bonuses
The Union, in its election campaign, has adopted the motto 'Performance must pay off again'. Central to their plan is a tax exemption for overtime bonuses, aimed at boosting work incentives and addressing Germany's labor shortage.
Critics, predominantly economists, have raised concerns about this proposal. They argue that the exemption could pose cortisol-related health risks, discriminate against certain groups, and increase bureaucratic costs. Women and low-income earners would likely be disadvantaged, as the exemption favors men and full-time employees, benefiting only one in forty people.
The exemption's practical impact is minimal. It would cover roughly 14 minutes of overtime per month per employee. Currently, only 5.1% of workers receive overtime payments, with just 1.8% receiving a surcharge. On average, employees would gain about 0.87 euros gross salary per month from the exemption.
The Union and SPD's proposal to exempt overtime bonuses from taxes seeks to encourage more work and tackle the labor shortage. However, it faces criticism due to potential cortisol-related health risks, discriminatory effects, and increased administrative costs. The practical benefits for employees are limited.
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