Chancellor Angela Merkel’s center-right Christian Democratic Union (CDU) has drafted reforms to executive pay that would limit tax deductions and increase transparency, according to a position paper obtained by Handelsblatt.
Under the proposal, only executive pay earned in Germany would be tax deductible for corporations. Executive pay earned and taxed abroad would no longer qualify as a tax-deductible business expense in Germany if the manager works abroad most of the time.
The CDU’s legal experts in parliament will meet to discuss the proposed reforms on Tuesday.
Lavish executive compensation has become a hot-button political issue as Germany gears up for federal elections in September. The center-left Social Democratic Party (SPD) has made fighting income inequality a central plank of its campaign platform.