The Federation of Taxpayers has voiced its support for a proposal by Federal Minister for Economic Affairs, Katarina Reiche (CDU), advocating for swift income tax reductions across all income brackets.
Reiner Holznagel, President of the Federation, told “Bild” that the initiative is timely and necessary. He emphasized the need for a growth stimulus for Germany’s economy, suggesting that achieving this requires a comprehensive income tax reform involving reduced tax rates and a flattening of the progressive tax system. Holznagel expressed concerns regarding the current system’s disproportionate penalty on hard work and achievement, citing the rapid increase in taxation with even modest salary increases.
Holznagel further argued that reduced tax rates could ultimately benefit the state through increased revenue generation. Referencing economic theories, including the Laffer Curve, he stated that excessively high tax rates can conversely lead to lower overall revenue. Studies suggest that the point at which this revenue decline begins typically lies around a 50 to 60 percent tax burden, a level that currently approximates Germany’s overall tax and contribution rate. He concluded that tangible relief for citizens and businesses is crucial for stimulating economic growth, which ultimately benefits the state.