Berlin The taxpayers’ association has asked the federal government to relieve the burden on citizens because of rising inflation. “The traffic light has to be improved,” said the association’s president, Reiner Holznagel. “Otherwise the Treasury will become a profiteer from inflation when it comes to income tax.”
The taxpayers’ association demands compensation for the cold progression. This is what creeping tax increases are called: Even if wage increases only compensate for inflation, the tax burden increases with rising wages. Although the higher wage does not lead to more purchasing power, the employee has to pay more to the tax authorities.
Federal Finance Minister Christian Lindner (FDP) has already announced that he wants to compensate for the cold progression. “The state must not enrich itself if people receive a salary increase, perhaps to compensate for lost purchasing power,” he said. Otherwise it would be “a tax increase through inaction”.
>> Read here: High inflation fills coalition coffers. The tax estimation working group has predicted a large tax plus
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Due to the high inflation, however, the compensation would be expensive for the state. The taxpayers’ association expects around twelve billion euros. He assumes inflation of seven percent in the current year. However, only five percent would have to be compensated, as overcompensation has frequently occurred in recent years. The federal government has been making up for the cold progression again and again for around ten years.
This year, the cold progression is a particular burden for taxpayers – the correction due to the change in the tax rate would be correspondingly high. According to calculations by the taxpayers’ association, the relief should be between 100 and 1100 euros per year, depending on the level of income.
A single with 3000 euros gross would be relieved by 167 euros. With a monthly salary of 8,000 euros, it would be 554 euros. A married couple with two children, where only one earns, would be relieved of a salary of 4000 euros by 216 euros. The highest relief is in the example calculations of the taxpayers’ association with an income of 12,000 euros, then 1108 euros would be necessary to compensate for the cold progression.
Traffic light coalition argues about relief
However, the dismantling of the cold progression in the traffic light coalition is controversial. While the FDP wants to relieve taxpayers accordingly, the SPD and the Greens are more cautious. They point to the reduced income from the Treasury and want to focus the relief on small and medium-sized incomes.
>> Read here: Traffic light dispute over relief: Lindner picks Habeck’s tax plan to pieces
Holznagel considers such considerations to be wrong. “It is completely inappropriate to have a fairness debate at this point and to make the reduction of cold progression conditional,” said the President of the Taxpayers’ Association. “Anyone who wants to tax higher incomes more heavily must propose a corresponding income tax rate.”
Since the cold progression hits everyone, according to the taxpayers’ association it must also be compensated for everyone. “And based on their tax burden, those on low and medium incomes would benefit disproportionately,” says Holznagel. The relief for a single person with a monthly income of 2000 euros is 5.9 percent, with 8000 euros it is 2.2 percent.
More: Comment: Tax cuts – more courage, Mr. Lindner!