Finance Minister Lars Klingbeil (SPD) has presented two concrete proposals to the negotiators from the CDU/CSU (Union) and the SPD regarding the planned reform of the income tax. According to reports from “Der Spiegel”, one variant offers a moderate relief for taxpayers, amounting to roughly ten billion euros. The alternative option promises a significantly greater reduction, totaling about twenty billion euros.
To finance these reforms, Klingbeil reportedly plans to increase the rich tax rate. This rate is currently set at 45% and applies to single individuals earning an annual taxable income of around 280,000 euros. As an incentive for the Union, the plan also suggests raising the threshold for the 42% top tax bracket, meaning this highest rate would only apply to incomes substantially higher than the current threshold of approximately 70,000 euros.
For the more financially intensive variant, Klingbeil is allegedly proposing an increase in the inheritance tax, in addition to other measures. This proposal comes ahead of the expected ruling by the Federal Constitutional Court. The Federal Ministry of Finance declined to confirm these plans when approached by the magazine, stating that discussions were “still confidential within the coalition” and that they would not comment on specific details.
