Germany’s Social Democrats demand tax cuts to join Merkel coalition Germany’s Social Democrats demand tax cuts to join Merkel coalition

Germany’s Social Democrats demand tax cuts to join Merkel coalition
30 Jan 2018

Middle-income earners in Germany will keep hundreds more euros in their wage packet if the Social Democrats (SPD) agree to join another government coalition  with Chancellor Angela Merkel.

According to the Frankfurter Allgemeine Zeitung, under the terms of a proposed coalition deal, a single person earning €40,000 (US$49,774) a year will pay €600 (US$747) less in tax by 2021.

The SPD leadership has agreed on the proposed deal with Merkel’s Christian Union but must now convince its membership to back the deal. The plan offers tax relief across the pay spectrum and would see a single-income family with two children on a salary of €40,000, (US$49,774) gain an extra €860 ($1,070) by 2021, for instance.

Unmarried people without children would see their incomes boosted mainly as a result of the Solidarity Tax for low and middle income earners being abolished, although people earning over €54,000 (US$67,915) would continue to pay it.

Meanwhile, single people earning €25,000 (US$31,109) would obtain €163 (US$203) more each year thanks to a change in the way social security contributions are distributed. Families would also benefit mainly from an increase in child support payments, which would increase by €25 (US$31) a month.

Research by the Organization for Economic Cooperation and Development last year showed that Germany’s citizens bear the second highest tax burden worldwide after Belgium, with nearly half of a single person's income currently going towards taxes and social security contributions.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

Middle-income earners in Germany will keep hundreds more euros in their wage packet if the Social Democrats (SPD) agree to join another government coalition  with Chancellor Angela Merkel.

According to the Frankfurter Allgemeine Zeitung, under the terms of a proposed coalition deal, a single person earning €40,000 (US$49,774) a year will pay €600 (US$747) less in tax by 2021.

The SPD leadership has agreed on the proposed deal with Merkel’s Christian Union but must now convince its membership to back the deal. The plan offers tax relief across the pay spectrum and would see a single-income family with two children on a salary of €40,000, (US$49,774) gain an extra €860 ($1,070) by 2021, for instance.

Unmarried people without children would see their incomes boosted mainly as a result of the Solidarity Tax for low and middle income earners being abolished, although people earning over €54,000 (US$67,915) would continue to pay it.

Meanwhile, single people earning €25,000 (US$31,109) would obtain €163 (US$203) more each year thanks to a change in the way social security contributions are distributed. Families would also benefit mainly from an increase in child support payments, which would increase by €25 (US$31) a month.

Research by the Organization for Economic Cooperation and Development last year showed that Germany’s citizens bear the second highest tax burden worldwide after Belgium, with nearly half of a single person's income currently going towards taxes and social security contributions.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

Leave a Reply

All blog comments are checked prior to publishing