Federal Finance Minister Lars Klingbeil (SPD) has submitted two possible variants for a planned income tax reform to other members of the coalition government, according to a report by Der Spiegel. The magazine cited unspecified internal sources for the information. One of the proposed variants would relieve taxpayers by around €10 billion. The second, more ambitious option would provide relief of approximately €20 billion.
In both variants, Klingbeil plans to raise the income threshold at which the top tax rate of 42 percent applies, moving it significantly higher than its current level. At present, the top rate kicks in for individuals earning a taxable annual income of around €70,000.
To offset the cost of the cuts, Klingbeil intends to raise the wealth surcharge, the so-called Reichensteuersatz — which currently stands at 45 percent and applies to individuals with a taxable annual income of around €280,000 or more. For the more expensive of the two variants, an increase in inheritance tax is also being considered as an additional source of counter-financing.
The Federal Finance Ministry declined to confirm the details when contacted by Der Spiegel. A ministry spokesperson was quoted as saying the coalition was "continuing to deliberate confidentially."
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