Since 2016, the federal government has reportedly compensated taxpayers a total of approximately 170 billion euros by eliminating what is known as “cold progression.” This figure, reported by “Bild” based on calculations from the Taxpayers’ Federation, relates to the equalization of the state’s burden on employees who were pushed into higher tax brackets due to inflation and subsequent wage increases.
Meanwhile, Reiner Holznagel, the president of a major association, criticized the federal government’s plans not to completely eliminate cold progression in the coming year. Speaking to “Bild”, Holznagel asserted that “the government’s decision not even to equalize cold progression is more than just a broken promise.” He accused the Union and SPD parties of betraying the legacy of their own former finance ministers, Wolfgang Schäuble and Olaf Scholz. He stated that preventing hidden tax hikes through cold progression had been a given for ten years, but the government is now promising relief while enacting the opposite.
