(Photo: imago images/Political Moments)
The council of experts was once the hotbed of supply-side politics. Flexible labor markets, less bureaucracy and lower taxes, that’s the sound of the past. Everything is different in his autumn report. In the middle of the energy crisis, the economists are proposing higher taxes or energy subsidies to Chancellor Olaf Scholz. One can only guess how they came to this recommendation.
The explanation of the government advisors that one must reach out to the higher earners in order to “increase the targeting of the overall package of relief” seems feeble. It is more plausible that the economists were impressed by the debate about an impending split in society. Economic expertise had to give way to the zeitgeist. The report fits into a redistribution debate that is being driven primarily by the SPD and the Greens. It is fitting that the Jusos then demand a 25-hour week with full wage compensation. Germany will be scrapped.
It is going too far to accuse the economists of not really understanding the economic structures in Germany and that they are primarily thinking of corporations when making their proposals. But a higher top tax rate naturally weighs heavily on the tens of thousands of medium-sized companies and craftsmen. For entrepreneurs, income tax is corporate tax. Many have hardly coped with Corona and the energy prices. To burden you with taxes now comes at the worst possible time. “In a recession, don’t kill the cow you’re going to milk,” as the saying goes.
>> The economy wants higher earners to pay more
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Top tax rate: the middle class is doubly affected
Incidentally, this also applies to the people in the country who already pay the top tax rate on a salary of 58,597 euros. Since the economists also reject the dismantling of cold progression, the hard-working middle class is doubly affected. The state is the big beneficiary of inflation, working citizens continue to be taxed unfairly. This is all the more surprising in view of some council members. The business wise man Veronika Grimm did a good job as chair of the gas price commission. Many employers are wondering why the economist Martin Werding, whom they sent to the Advisory Council, was unable to influence the tax proposals.
What does politics expect from an advisory body? Scholz and Economics Minister Robert Habeck can raise taxes themselves. Hopefully not against the will of Finance Minister Christian Lindner. The economists could have mapped out a path for such a large economy to get through the recession and fight inflation. There is no blueprint for this. Alternative ways of financing the fight against inflation would also have been interesting. But please not the recommended energy solos. It took 30 years to abolish most of the solis after reunification. Everyone can decide for themselves how long an energy solo will keep us happy.
The economists should have taken care of the social budget. Germany now has a state quota of almost 52 percent. That’s when Helmut Kohl started socialism. Every pensioner is granted more money. But every pension increase is also at the expense of the younger generation, who often do not vote for the Union and the SPD. The report also lacks a chapter on the bloated state. For everything and everyone there is now a funding pot and a lid on top. You don’t hear anything about it from any trade association. That would be a task for the Advisory Council. Maybe at the next appraisal.
More on this: FDP and economists warn of redistribution plans by the SPD