Income tax: Klingbeil defends draft tax reform

The planned changes to income tax have met with widespread criticism in the Bundestag from the opposition and also from the ranks of the coalition partner Union. Finance Minister Lars Klingbeil, however, defended the plans in the first consultation as a fair compensation.

The SPD leader referred to a gross relief of ten billion euros for citizens with small and medium incomes in 2027 and 2028. He also worked to ensure that relief reaches families with children and the “people in the middle of society”, i.e. educators, police officers and nurses.

Klingbeil “could have imagined more”

A family with two middle incomes and two children will have a total of “over 600 euros more money in their pockets per year” in 2028, said Klingbeil. "That's a lot of money for a family." The minister emphasized again that he “personally could have imagined more.” He is still open to this if more leeway is created and his ministry will "be happy to support this with a benevolent attitude," said Klingbeil.

The financial policy spokesman for the Union parliamentary group, Fritz Güntzler, also advocated increasing the scope of the reform. "That's billions, but in terms of the overall budget it's manageable," he said and called for improvements to avoid creeping tax increases due to inflation. “We should tackle this together,” said the CDU politician.

The Left and the Greens don't go far enough

Sharp criticism came from the opposition. The Greens and the Left criticized the plans as socially unbalanced. Sascha Müller from the Greens complained that the gap between child benefit and the tax advantages from child tax allowances for top earners was not being reduced as promised, but was increasing. “The tax subsistence minimum for children must of course remain tax-free,” he added. "But where we have political space, we should use it for more justice."

Doris Achelwilm from the Left Party also called for an end to this unequal treatment and suggested child benefit of at least 350 euros. Your group is aiming for fundamental changes with a volume of 30 billion euros, financed by greater taxation of the top five percent.

AfD financial politician Kay Gottschalk accused the government of “deliberately misleading”. The relief is not enough to compensate for the cold progression. In addition, the government is putting a burden on middle performers by tripling the flat rate tax for mini-jobs and reducing the tax bonus for craftsmen's services.

Klingbeil defends “tax for the super-rich”

Klingbeil referred to the difficult budget situation. “We are easing the burden on the citizens of our country with ten billion euros,” said the minister. This would set “the right priorities as far as possible”. He defended the new "tax for the super-rich" with a taxable income of more than 280,000 euros per year: "At the top, more contributes to relief in the middle of our country. I think that's fair."

The Income Tax Reform Act is scheduled to come into force on January 1, 2027. It provides for a higher basic allowance, more child benefit and an increase in the employee flat-rate allowance to 1,430 euros. This will be counter-financed by a new top tax rate of 47 percent for incomes over 280,000 euros, a reduction in the tax bonus for craftsmen's services and a higher flat-rate tax on mini-jobs.

The gross relief of around 9.9 billion euros is offset by additional income of 4.3 billion euros. This results in a net relief of around 5.6 billion euros. After the debate, the law was referred to the relevant committees.