Finance Minister Christian Lindner is advocating for a reduction in taxes for businesses in Germany. He proposes lowering the corporate tax rate from 30 to 25 percent, possibly by eliminating the solidarity surcharge. Lindner argues that this reduction is necessary to maintain the competitiveness of the economy, which has slipped from 6th to 22nd place in international rankings over the past decade. The demand for lower taxes on businesses is not new and was part of the FDP’s election program in 2021, aligning with the OECD average rate of around 25 percent.
Lindner has also raised the possibility of completely abolishing the solidarity surcharge, stating that only the federal government can make that decision. However, he noted that there is limited willingness among CDU states for such relief measures, highlighting the need for a growth concept to be incorporated into the federal budget by 2025. Lindner has also called on the coalition partners, the SPD and Greens, to address the issue of “cold progression,” which refers to individuals being pushed into higher tax brackets due to inflation without an increase in real income. He emphasized the need for an inflation adjustment in income tax to prevent this stealthy tax increase.
In addition to advocating for fairness in the tax system, Lindner stressed the importance of recognizing the contributions of skilled workers and the middle class. He criticized the lack of respect for taxpayers from the coalition partners and argued that treating these individuals as mere workhorses would diminish their motivation to excel. The term “cold progression” refers to the phenomenon where individuals see their incomes rise but pay higher taxes, resulting in a decrease in their real income. Adjustments to tax brackets and exemptions are typically made to address this issue.
Lindner’s push for lower taxes on businesses and addressing the issue of “cold progression” is part of a broader effort to stimulate economic growth and support entrepreneurship in Germany. By lowering the corporate tax rate and adjusting income tax brackets to account for inflation, Lindner aims to create a more favorable environment for businesses to thrive. The proposed measures also align with the FDP’s agenda and previous policy stances, reflecting a consistent focus on economic liberalization and reducing the tax burden on individuals and companies.
The call for tax relief comes at a time when the German economy is facing various challenges, including the impact of the COVID-19 pandemic and global economic trends. Lindner’s proposals have implications for government revenue and fiscal policies, as well as broader debates around economic competitiveness and income distribution. As discussions around tax reforms and economic stimulus measures continue, Lindner’s statements and advocacy for lower taxes on businesses will likely play a significant role in shaping the country’s economic policy agenda in the coming years.
