Suddenly the economists want to raise taxes to create more justice and curb inflation. But that is a fatal signal to Germany’s society, in which there is already a great deal of redistribution. An analysis.
Federal Minister of Finance Christian Lindner was just happy about record tax revenues. The state, that is the message behind this message, is the main beneficiary of the record inflation. Responsible for the drastically high tax revenues are: the higher earners.
Ironically, the Five Wise Men now want to raise taxes for them. Because that ensures more justice and dampens inflation, say the economics professors. Today you are presenting your report for the federal government.
The social budget this year is 160 billion euros. It is money that is redistributed from the haves to the have-nots. Hardly any other country shovels as much money from the rich to the poor as the Federal Republic of Germany.
There is therefore a double redistribution at the expense of the wealthy: this group pays by far the most taxes, most of which goes to the poor via social redistribution. More and more is taken from some, more and more is given to others.
And that’s how it always goes. The traffic light coalition intends to pass the citizen benefit reform in the Bundestag this week – and raise Hartz IV; by more than ten percent. That’s more than any wage round will give employees this year. And then a major housing benefit reform is also planned – this too is a major social measure with which money is only redistributed in one direction: from rich to poor.
The narrative of social organizations that in Germany the poor are getting poorer and the rich are getting richer is a fairy tale. Without the people who have a decent job and earn decent money, the welfare state would not exist.
As a reminder: the top earners, the top ten percent of taxpayers, are responsible for half of the taxes in Germany. If you expand this circle to the top 30 percent, they generate 80 percent of the taxes. You can also look at it from the perspective of the less-productive: the bottom 70 percent of taxpayers only pay 20 percent of all taxes collected by the state.
The reason is the tax progression – and even that is a political decision; because there is no other justification for the fact that high earners have to pay disproportionately more for each additional euro earned, no justification. Were it not for progression, the high earners would still pay the lion’s share of taxes. But nobody talks about that anymore.
The redistribution from top to bottom has long since become the normal case, which is taken for granted. However, it is unusual that the economic wise men, whose regulatory orientation has been more or less reliable up to now, are now switching to the redistribution camp.
The Liberal camp has thus lost another of its few remaining allies. Liberal is not meant here in a party-political sense, but in the sense of ordoliberal: without those who earn money, no state can be made.
The economists also want to postpone the lowering of the cold progression – also for reasons of justice. However, the so-called flattening of tax progression is not a “tax cut for higher earners”, as the social lobby repeatedly argues; but the prevention of an illegitimate tax increase.
Illegitimate, because inflation eats up wage increases as a result of the increased tax rate. Federal Finance Minister Olaf Scholz had repeatedly prevented this effect. Now Christian Lindner has announced him again. Note: A tax correction is suddenly anti-social not only because it no longer comes from a social democrat, but from a liberal.
Germany is under a lot of pressure right now. One company after the other is shutting down, investments are migrating from Germany – if they are still investing. “Tax increases in the middle of an economic crisis, with a historically high tax revenue ratio last year and a high need for private investment, must be well justified,” says Clemens Fuest, President of the Munich Ifo Institute. It is a severe scolding for the fellow economists from the council of wise men.
It is clear that the SPD applauds the wise. It has suddenly and quite unexpectedly gained a new ally in what social democrats reliably do best: discovering “gaps in justice” and filling them through collections from the haves and the earners.
The SPD just decided over the weekend to keep turning this screw. They want a wealth tax back, and they want to increase the taxation of inheritances. The circle of those who will be willing to pay for this is getting smaller and smaller. One does not have to be a prophet to predict this.
What are these signals to the younger generation? If it’s becoming less and less worthwhile to work hard for your own advancement, at least in Germany, what conclusion will you draw? One is suspiciously close: off to public service. Or just go abroad.
Turning to the political: one can only hope that Christian Lindner will remain firm – towards the SPD, the Greens, and now also the business wise men who – beware, puns – have meanwhile made him an orphan.