Federal Minister of Finance Lars Klingbeil (SPD) sharply dismissed criticism from the Union regarding his proposed income tax reform. Addressing the issue of “cold progression”-a situation where wage increases merely offset inflation, leading to unchanged or even decreased real purchasing power through higher tax burdens-Klingbeil told the “Redaktionsnetzwerk Deutschland.” He emphasized that the agreement was reached cooperatively, stating, “The Federal Chancellor and the CSU leader decided on this together. Therefore, I assume this agreement holds.”
The tax dispute within the ruling coalition centers on how to address this cold progression. Klingbeil asserted that both the Social Democrats and the Union intentionally focused the reform on low and medium incomes, as well as families. He maintained that the relief provided is substantial, claiming, “For a family with two children, we achieve relief of approximately 600 Euros per year.” He stressed that “this should not be underestimated” and affirmed, “We decided together in the coalition committee to set this focus.”
While acknowledging the current fiscal constraints, Klingbeil highlighted that the reform still offers partial compensation for cold progression, specifically for those in smaller and medium income brackets.
When questioned whether the coalition would revise the plan if it turned out that the 600 Euro relief amount was largely consumed by rising costs in social security, Klingbeil responded that his initial proposals had envisioned “more.” He concluded by stating his willingness to cooperate fully: if Markus Söder or the Chancellor wanted to increase the top tax rate or adjust inheritance tax in order to provide even greater relief to citizens, he would be the first to support it.
