(de-news.net) – There have been divergent and, at times, sharply contrasting reactions across Germany’s political and economic landscape to the proposal advanced by Carsten Linnemann, the CDU’s Secretary General, to reduce income taxes, particularly for higher earners. Linnemann has advocated raising the annual gross income threshold at which the highest marginal tax rate applies from 68,000 euros to 80,000 euros. In his view, such an adjustment would help alleviate the burden on a substantial segment of taxpayers who, although not traditionally classified as top earners, are nevertheless subject to comparatively steep marginal rates. He framed the proposal as a corrective to the so-called “middle-income bulge” within Germany’s progressive tax system, arguing that recalibrating the threshold would smooth distortions in the progression curve and prevent bracket creep from disproportionately affecting upper-middle-income households.
At the same time, Lars Klingbeil (SPD), the Federal Finance Minister, is reportedly developing an alternative reform initiative designed to lower income taxes primarily for middle- and lower-income earners. According to reports citing a ministry spokeswoman, this plan is currently being elaborated in line with the commitments set out in the governing coalition agreement and is expected to be presented later this year. While the ministry confirmed its intention to deliver targeted relief for middle-class households, officials emphasized that deliberations remain ongoing with regard to the precise structure, timing, and fiscal scope of the measures. This suggests that the SPD’s approach is oriented toward more selective adjustments, potentially prioritizing distributive balance and budgetary sustainability over broader structural changes to the upper brackets.
Coalition and opposition clash over direction of income tax policy
Within the SPD as a whole, Linnemann’s proposal has been received with caution and, in some quarters, skepticism. Wiebke Esdar, deputy parliamentary group leader, underscored her party’s continued commitment to ensuring that the financing of public expenditures is distributed equitably. Her remarks signal concern that raising the threshold for the top marginal rate could disproportionately benefit higher-income earners while limiting fiscal flexibility for redistributive or investment-oriented policies. By contrast, representatives of the Alternative for Germany (AfD) have sought to capitalize on the broader tax debate, arguing that comprehensive tax reform is necessary to strengthen the economic position of the middle class. However, the CDU’s proposal has drawn direct criticism from the Alliance 90/The Greens, which contend that the measure does little to address the structural pressures facing average wage earners and instead confers disproportionate advantages on higher-income groups. Similarly, members of The Left Party have argued that policy priorities should center on targeted support for low- and middle-income households rather than on reducing the relative tax burden at the upper end of the income distribution.
Economic analysts have likewise raised questions regarding the fiscal effectiveness and distributive impact of the CDU’s proposal. Clemens Fuest, president of the Ifo Institute in Munich, reportedly observed that the number of taxpayers subject to the highest marginal rate remains comparatively limited. As a result, adjusting the threshold upward would offer only restricted scope for broad-based relief. He further cautioned that such a policy shift could generate unintended consequences, including additional strain on medium-sized enterprises, and might constrain the federal budget to an extent that would leave insufficient room for more substantial tax reductions benefiting the broader middle class.
