Politicians' proposed tax strategies

The German federal election, scheduled for September 26, 2021, is shaping up to be a significant event, with taxation taking centre stage in the election programs of all major parties.

Taxation is a hot topic, and all parties - SPD, Greens, Left, CDU/CSU, FDP, and AfD - have put forward their proposals.

The SPD, Greens, and Left advocate for an increase in the top tax rate and the introduction of a wealth tax, aiming to address budget holes caused by the COVID-19 pandemic. The Left additionally demands a wealth levy for the super-rich. On the other hand, CDU/CSU and FDP propose tax relief and economic growth, and oppose tax increases and a wealth tax.

The Greens and Left want to abolish the flat tax, while CDU/CSU and FDP aim to strengthen wealth-forming benefits by increasing the saver's allowance and granting tax exemptions from the real estate transfer tax for the first-time purchase of self-used residential property.

Regarding tax evasion and aggressive tax planning, SPD, Greens, and Left want to supplement the EU-wide reporting obligation with a national reporting obligation. The CDU/CSU and FDP have made promising but not ambitious proposals in this area.

The introduction of a European financial transaction tax is likely to be back on the agenda in the next legislative period, regardless of the election result. However, the FDP rejects this, while CDU/CSU, Greens, SPD, and Left advocate for its introduction.

The continuation of the withholding tax and share deals is expected. The BVI evaluates the proposals of the parties as significantly different, with the largest areas of agreement between CDU/CSU and FDP on one hand, and SPD, Greens, and Left on the other.

When it comes to tax promotion of private wealth formation, the election programs of all parties are disappointing, according to the BVI. They could not find attractive offers for savers and small investors in any of the programs.

The AfD aligns with the tax reform concept of Prof. Paul Kirchhof, which CDU/CSU campaigned with in 2005. The Left stands out with some extreme demands, while the AfD's proposals are yet to be fully outlined.

In summary, taxation is a critical issue in the upcoming German federal election. The parties have put forward their proposals, ranging from increased taxes and the introduction of a wealth tax to tax relief and economic growth. It remains to be seen which party will form the next government and implement their taxation policies.