Tax cuts due to inflation: Lindner’s plans are fair

You are reading an excerpt from the weekday newsletter “The Other View”, today by Fatina Keilani, editor of the “Neue Zürcher Zeitung” in Germany. Subscribe to the newsletter for free. Not resident in Germany? Benefit here.

A group of friends goes to a restaurant. Someone orders expensive filet and exquisite wine, another sticks with a small salad and tap water, the others range in price in between. When the bill comes, it should be shared “fairly”. “We’re not petty, everyone should just pay the same,” is one suggestion. “I’ve saved extra because I can’t afford that much and now I don’t want to pay for the others,” replies the woman with the salad.

The question of what is just can seldom be resolved to the satisfaction of all. The German Finance Minister Christian Lindner is currently finding out. On Wednesday, the FDP politician presented the cornerstones of an “inflation compensation law”. The cornerstones had already leaked out, and criticism was not long in coming. The Green coalition partner in particular sensed a mean trick by capital. “High earners will be relieved much more,” it sounded. That is unfair.

That’s true about the greater relief, but it’s only true in absolute numbers. In percentage terms, low earners should be relieved many times more. And those who have to pay the German “wealthy tax rate” of 45 percent should not benefit at all.

Even before Lindner explained the basic principle of tax law – “broad shoulders carry more than narrow shoulders” – he spoke of the planned blessings of social policy, such as the upcoming housing benefit reform and the planned introduction of citizen income for the new year. He emphasized that pensioners would also benefit from his plans – perhaps he still had the criticism of the exclusion of pensioners from the energy price flat rate in mind. The liberal seems to have internalized the fact that the social factor must always be emphasized in the current government constellation – and yet it can never be social enough for the left-wing spectrum.

social envy and populism

Germany is not only a high-tax country, but also a champion of social envy. This leads to stupid populist statements like an actor’s tweet: “We have to relieve people who can no longer afford their gas bills, not people who want to heat their pool, dear Christian Lindner.” As if Lindner’s suggestions didn’t aim to achieve just that.

Another irony: While the working middle class is concerned about energy costs, one group of people need not worry – the heating bills of welfare recipients are entirely covered by the office.

There had already been similarly adventurous comments about the so-called tank discount. It was misogynistic, said a Green Party politician, because women drive fewer cars and would be less relieved by the discount. “You’ll have lower costs then, too!” they wanted to call out to the lady.

Lindner’s tax plans are reasonable, and they deserve to be viewed without left-wing ideological glasses. The Minister of Finance wants to relieve the burden on small incomes the most and cap savings on high incomes. He is obliged to take some measures anyway. The subsistence level, for example, is tax-free, but increasing it is constitutionally required in view of the high inflation.

Of course, it is also right to counteract «cold progression». If inflation eats up the salary increase and at the same time the tax burden increases due to assessment in a higher tax bracket, real income falls. The state should not enrich itself at the expense of the citizens from inflation, says the finance minister. He is right.

Overdue relief of the working center

If the Greens and SPD had new arguments in tax policy, it would be worth discussing. But they predictably keep singing the same tune over and over again. That’s below the level, especially in a coalition.

After the FDP in the government recently let itself be stretched in front of so many left-wing carts, a piece of liberal tax policy can finally be seen here, which by no means only benefits the high earners. In relation, the draft primarily relieves low and normal earners. Rightly so, because, speaking to Lindner, their shoulders have not gotten any wider. One can only hope that this sensible draft will not be torn apart in the parliamentary process.