Fiscal Fortunes

Growing Calls For Tax Cuts

Germany Government
Mr. Schäuble is keeping a tight fist. Picture source: AP

Finance Minister Wolfgang Schäuble presented his latest tax forecasts this Thursday, the last set before the country goes to the polls for parliamentary elections this fall. He announced record tax revenues: The government forecasts €732.4 billion ($790 billion) in revenue this year, €7.9 billion more than originally anticipated.

And yet, true to Mr. Schäuble’s cautious style, he discouraged all parties from making expensive pledges. He argued that more money is needed for internal security, the German Army and infrastructure, not to mention continuing billions for the refugee crisis. While he does support some tax cuts for lower and middle income groups, it’s nothing significant. Even though his own ministry calculates a tax surplus of €55 billion through 2021, Mr. Schäuble believes there cannot be more than €15 billion in tax cuts.

It is not clear how this will go down. The tax burden on Germans is getting heavier and heavier. The German Finance Ministry estimates nearly 3.9 million Germans are now paying the maximum tax rate. Since 2004, the number of taxpayers in the 42-percent tax bracket has more than doubled. This maximum tax rate is no longer being paid only by the super-rich, but increasingly by well-earning specialists.

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