The Federation of Taxpayers has voiced its approval of Economy Minister Katarina Reiche’s (CDU) call for a swift reduction in income tax rates for all income brackets.
Speaking to “Bild” Federation President Reiner Holznagel characterized the initiative as correct and long overdue. He argued that Germany urgently requires a stimulus for economic growth, which can only be achieved through a comprehensive income tax reform. He advocated for lower tax rates and a flattening of the progressive tax brackets.
Holznagel expressed concern that current tax structures disproportionately penalize effort and achievement, as each salary increase is immediately subject to higher taxation.
He further suggested that reduced tax rates could ultimately generate increased tax revenues for the state in the medium term. Referencing research, including the Laffer Curve theory, he stated that excessively high tax rates can ultimately lead to diminished returns. Studies suggest a point of diminished returns occurs when the tax burden reaches approximately 50 to 60 percent. Germany’s current combined tax and levy burden is situated within that range.
Holznagel concluded that noticeable relief for citizens and businesses is essential to fostering economic growth, ultimately benefiting the state itself.
