The bill is coming

The government has provided hundreds of billions of euros to cushion the corona crisis. At the end of March, Olaf Scholz declared that Germany could afford it. Then why is he now announcing higher taxes?

Olaf Scholz (SPD), Federal Minister of Finance, comes to a meeting of the Bundestag Finance Committee.

SIf the SPD should win the next federal election, its chancellor candidate Olaf Scholz wants to tax top earners higher. He leaves open how much more “the rich” should pay. Likewise the question of who is rich at all. The Federal Finance Minister of the “Rheinische Post” just said literally: “In view of the many tasks that the state is now shouldering, it must be clear that people who earn a few hundred thousand euros will in future be able to make a higher contribution to the financing of the community.”

In purely theoretical terms, it is therefore possible for couples with a joint taxable income of more than 200,000 euros to be affected. Perhaps Scholz was only thinking of single earners over 900,000 euros. Perhaps he is thinking of socialist marginal tax rates of 80 percent, maybe just a hundred euros more a year. One does not know.

Since it can be assumed that a federal finance minister knows the marginal rates of progressive income tax and the federal financial needs, Scholz could of course have expressed himself more precisely. Above all, the fact that he didn’t do it shows that it doesn’t depend on the specific euro. Rather, the direction must be right.

One year before the general election, Olaf Scholz made it clear: the wealthy should pay more in the future!

There are many reasons for that. Some are political in nature. After the election, the SPD is striving for a red-red-green alliance. Both the Left and the Greens are known to have nothing against higher taxes – especially not if they hit “the right people”. Scholz, who is considered a pragmatist to conservative in his party, must also take over his own troops from the left. And last but not least, the SPD needs a topic with which it can both differentiate itself from the Union and mobilize its own people. And of course the voters.

Will “More Justice” Draw This Time?

With higher taxes and “more justice” it did not work out in the last two election campaigns. As with any crisis, however, many people will emerge from the Corona crisis as losers. Millions are on short-time work, hundreds of thousands became unemployed or had to close their businesses forever. Perhaps, given the misery, voters are now more receptive to the message?

There are, however, also economic reasons why the comrades want the high-income earners to their wallets. At the beginning of July, the Bundestag passed the second supplementary budget, according to which the federal government alone will incur additional debts of 217.8 billion euros this year – a record.

Just two weeks ago, Scholz also stated that he firmly expected that the debt brake could not be adhered to in the election year because of the Corona crisis. In this respect, it should be noted that there are high debts that have to be serviced and, in the best case, someone has to repay them.

But how did Olaf Scholz say at the end of March when he brought the first supplementary budget into the Bundestag with a net borrowing of 156 billion euros: “We can afford it.”

Now, five months later, the Social Democratic Vice Chancellor sounds different: “Pragmatic politics does not mean that top earners are spared and therefore incurs additional debts.” What is needed is a “tax system that is more performance-based,” said Scholz in the “Rheinische Post”.

If you want to make it easy for yourself, you forget the optimism of the end of March, join in the song of the SPD and state: There are only the rich left.

But that jumped too short. According to the Ministry of Finance, there are almost 40 different types of tax in Germany, from beer tax to energy taxes, from VAT to income tax, from dog tax to property tax. In this respect, it is possible to demand a higher income tax for top earners. But there is no alternative to it.

Above all, no one should regard the federal government’s exorbitantly high levels of new debt as inevitable. Compared to other countries, Germany is getting through the crisis well.

Nevertheless, the impression arises that many billions are being spent all too carelessly. To name just three examples: Why does the state really have to subsidize every electric car with 6,000 euros? Does it make sense to extend the short-time allowance now until the end of next year? Does the European reconstruction fund really have to be worth 750 billion euros, of which just 30 billion euros come to Germany?

As early as May, the CDU budget politician Eckhardt Rehberg warned in the FAZ: “Even in this crisis there must be no abuse and indiscriminate distribution of money.” He is right. Because all experience teaches: the bill comes.