The Federal Chancellor from the SPD is helping his Minister of Finance from the Liberals with the cold tax progression. The reason: Scholz is not head of the SPD, but Chancellor, which he would like to remain. Olaf Scholz wants to pacify his social democrats differently.
“Very, very helpful.” “Can’t be a wrong idea.” “Good serve.” On his swivel chair in the Federal Ministry of Finance, Federal Finance Minister Christian Lindner (FDP) will have watched the Chancellor praising the Finance Minister and thought: Yo, Olaf – is running to me.
Social Democrats, Greens, the DGB and, oddly enough, economics professors have been attacking the chief liberal since yesterday. Because he wants to organize a tax reform that does not lead to a tax cut, but only to the fact that taxes are not increased next year due to inflation.
Lindner’s opponents find this socially unfair, such as the head of the German Institute for Economic Research, Marcel Fratzscher, because: “70 percent of this benefits the 30 percent with the highest income.”
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And: “People with low incomes, who pay little or no income tax, get practically nothing from it.” Well, grab a naked man’s pocket, one would like to call out to the socially active Mr. Economist.
If you don’t pay taxes, you can’t have taxes waived. That’s one. The other thing: before higher earners can be given tax relief, they have raised the lion’s share of government revenue with the help of their high tax burden.
The rich finance the welfare state, the wealthier the more. And then it doesn’t even seem clear whether Fratzscher’s claim is factually correct at all, because a tax expert has calculated for the Handelsblatt who will be relieved by Lindner’s reform and how.
One result: Single parents with a gross monthly income of around 1,000 euros are relieved by 36 percent, while those with an income of 7,500 euros are only two percent. “Especially the lower and middle incomes will also feel the relief clearly,” comments Markus Herbrand, financial policy spokesman for the FDP.
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The Federal Chancellor knows very well these connections, which are not the result of “cold” but of “hot” progression, that state collection that does not come secretly, but openly and unvarnished in all its painfulness.
When asked if Lindner’s plan wasn’t socially unfair, Olaf Scholz whispered something about percentages and absolute amounts. He doesn’t elaborate, the only thing that is clear is that he is following the calculation method used by his finance minister. But that’s not all.
Olaf Scholz confirms what Christian Lindner deliberately mentioned yesterday: the Federal Minister of Finance who has already suggested twice against cold progression was himself, Lindner’s predecessor. But that’s not all: Scholz grabs two more points, certainly to the delight of Lindner.
Scholzen’s socialites would love to introduce an “excess profit tax”, if only because it sounds so pleasingly anti-capitalist. The Chancellor makes it clear that there won’t be one, because: firstly, the traffic light is not in the coalition agreement and, secondly, it would also be “technically very challenging”.
After all, if you want to steer away the “excess profits” from Shell, which profited from the war, you would also have to steer them away from Biontech, winner of the Corona crisis. A Lex mineral oil tax corporations would be unequal treatment and in this respect probably unconstitutional. From a tax point of view, there are no good and bad corporate profits.
But, as I said, Scholz remains liberal when it comes to tax issues because: The SPD Chancellor also flatly rejects an increase in the top tax rate. It was in two election programs, but not in three.
In other words: if three build a traffic light, all three must also be able to light up. Everyone has the chance to push through as much as possible of what is important to them and their “customers” (or in their wallets).
That’s also good for the SPD, because the Federal Minister of Labor did the same thing as the finance colleague. Hubertus Heil’s idea of turning Hartz IV into a citizen’s allowance and raising the rate per capita by around 50 euros and dropping all state controls for the time being is certainly not liberal.
But it is already becoming apparent that the Social Democrats will use Heil to get back a sense of social justice that they have to give to Lindner because of the tax. Fair enough, Scholz would say, who also spoke a little English again today.
The considerable relief for those who have little, which Scholz lists, plus the non-increase in taxes for those who have more, which Lindner is planning, plus the next and thus already third social package that the traffic light is currently planning – all of this should prevent this from happening , which Annalena Baerbock called “popular uprisings”. That is also the reason why Scholz does not believe “that there will be unrest in this country”.
He’s the traditional social democrat, the chancellor. He is convinced that with a suitcase full of “social engineering” Germany can be made a better and therefore also a calmer place.
Olaf Scholz is very close to his Hamburg role model Helmut Schmidt, who once said: “I consider the welfare state as we know it in Germany and other countries to be the greatest cultural achievement that the Europeans achieved in the course of this terrible 20th century to have.”
