Brigitte Zypries

Economics Minister: Middle Class Needs Tax Reform

  • Why it matters

    Why it matters

    Social inequality is expected to become a major campaign issue in the German general election on September 24.

  • Facts

    Facts

    • In an interview with Handelsblatt, Economics Minister Brigitte Zypries pledged to ease the tax burden for ordinary earners to alleviate a sense of injustice not unlike the frustration that swept Donald Trump to power.
    • Ms. Zypries, a Social Democrat, said some top managers “seem to have lost all sense of proportion” on remuneration.
    • She said faith in the state sector was reviving, with many people having more trust in the state for providing basic services more efficiently and cheaply.
  • Audio

    Audio

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main 75414600 source Kay Nietfeld DPA – Economics Minister Brigitte Zypries talks with Finance Minister Wolfgang Schaeuble before cabinet meeting Feb 2017
Finance Minister Wolfgang Schäuble talks with Economics Minister Brigitte Zypries. Source: Kay Nietfeld / DPA

In an interview, German Economics Minister Brigitte Zypries compared middle-class dissatisfaction over stagnating wages to the rage that elected Donald Trump as U.S. president.

Ms. Zypries, a Social Democrat, spoke seven months before Germany’s September 24 federal elections. The Social Democrats, with new party leader Martin Schulz, have identified economic injustice as a key issue to dethrone Angela Merkel and her Christian Democrats.

Ms. Zypries, 63, is stepping down from national politics in September. She said Germany needs to reform its income and corporate tax structure to create a fairer system and relieve the burden on Germany’s “hard-working middle class.”

The redistribution theme is a standard campaign issue for Social Democrats, but in Germany, it is one that often resonates. Under the current tax code in Germany, wage earners reach the country’s onerous top income tax bracket on all earnings above €60,000 a year.

The result: Germany’s vast, struggling middle class provides the lion’s share of the nation’s avaricious appetite for public dollars. Ms. Zypries spoke with Max Haerder and Gregor Peter Schmitz of WirtschaftsWoche, a sister publication of Handelsblatt.

 

Ms. Zypries, your father owned a large photo laboratory and provided employment to dozens of people. Did he embody values like integrity and conscientiousness that are missing in many managers today?

My father lived these values every single day. “Entrepreneur” comes from a French word meaning “to undertake.” Throughout his life, he remained committed to assuming risks and taking responsibility for his employees. That is a characteristic of many family enterprises I often find missing in hired managers of publicly listed companies. There is a coming and going, often there’s no close connection to the company or its workforce – and unfortunately, no sense of sustainable management.

Are you saying that hired managers inherently have no feeling of responsibility?

Germany has excellent managers, no question about it. But interests and expectations – for example, the short-term concerns of shareholders – often have another focus. It’s a different matter when entrepreneurs are inclined and obligated to think in terms of family generations. They know their parents worked hard to achieve success and difficult periods must be shared and endured. Owners look their employees in the eyes. This creates a moral standard to be lived up to. In my opinion, in large companies there is often too much distance that ends in cold detachment.

You sound quite frustrated about the leadership elite in the German economy.

Not at all. But I’m concerned that many workers can no longer live adequately from their wages, while some of our top managers seem to have lost all sense of proportion. In the last few years here in Germany, we have witnessed developments that clash with our model of a socially just market economy. When I served as Justice Minister, I sponsored a law requiring disclosure of managerial salaries. I hoped that financial shamelessness would be wary of exposure to light – but it seems there is little sense of shame. I would like to see fair remuneration, from the lowest wage groups all the way to managerial salaries.

 

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