A growing chorus within the Social Democratic Party (SPD) is advocating for the introduction of new taxes and an increase in inheritance tax. The SPD parliamentary group intends to discuss these proposals with the Christian Democratic Union (CDU) and Christian Social Union (CSU).
Wiebke Esdar, the SPD’s parliamentary group deputy leader, told the “Tagesspiegel” that the widening gap in wealth distribution within Germany necessitates a re-evaluation of how substantial assets and inheritances contribute to the common good. She emphasized that potential increases would target individuals with exceptionally high net worths and that these discussions would be conducted in collaboration with their coalition partners. Esdar suggested that addressing wealth inequality could be in the interest of the CDU/CSU as well.
She further stated that large-scale projects championed by the CDU/CSU, such as corporate tax cuts, require robust and reliable funding sources. A ruling from the Federal Constitutional Court regarding the current inheritance tax policy is also pending. The SPD’s primary goal is to ensure that the middle class is not disproportionately burdened.
Earlier this month, other SPD politicians voiced support for new or elevated tax rates. Andreas Bovenschulte, mayor of Bremen, highlighted that Germany’s current tax ratio – the proportion of taxes relative to gross domestic product – is one percentage point below pre-pandemic levels. He suggested that any tax increases must be socially equitable. Bovenschulte specifically endorsed the implementation of a digital tax, similar to those already in place in several European nations, including France, Spain, Italy and Austria, as a way to partially offset the negative impacts of recent trade agreements with the United States.
SPD parliamentarian Ralf Stegner urged against the taboo surrounding tax increases, referencing substantial increases in German defense spending alongside recent tax reductions. He cautioned that calls for social cuts alongside a refusal to explore revenue enhancements could destabilize the coalition government and the country’s overall economic stability.
Former SPD Vice President Stegner recalled the joint decision, made under Chancellor Angela Merkel, to increase the top income tax rate for high earners. He suggested revisiting that model, where individuals earning €250,000 annually as a single person or €500,000 as a couple, could be subject to a tax rate exceeding 45%. He cited historical precedent, noting that under Helmut Kohl, the top tax rate reached as high as 56%.