CDU and SPD before the election: The differences in pension and tax

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Chancellor Angela Merkel has affirmed that the CDU will go into the election campaign without a pension plan. Thus, in contrast to the SPD, it is satisfied with the current pension plans until 2030. On the other hand, there is some agreement on the abolishment of the solidarity surcharge. The Social Democrats also want to relieve low-income earners in particular.

After Minister of Labor Andrea Nahles and SPD Chancellor candidate Martin Schulz presented the Social Democrats’ pension plans for the next legislative period, it was initially unclear whether the Union would adopt its own concept. Now, Angela Merkel (CDU) has made it clear that she sees no need for further changes for the time being. Rather, among other things, the development of the pension level is regulated until 2030, so that the pension will play no role in the 2017 election campaign .

Solidarity surcharge should go away – but for whom?

In one point, the SPD and CDU at least agree on the point: The solidarity surcharge should be reduced . There are different opinions, however, with regard to whom the solos should be abolished. The Christian Democrats want to gradually abolish the surcharge for all from 2020 onwards . For the time being, the SPD is planning an increase in the exemption limits, whereby mainly singles with an income of up to 52,000 euros gross will be relieved annually. Anyone earning more will, according to Schulz’s plans, continue to have to pay a salary, at least in the near future.

Tax concept of the SPD: Higher tax burden for high earners

The tax concept of the SPD provides for additional changes. Accordingly, the plans include, among others:

  • the shift of the top tax rate from a taxable income of 60,000 euros instead of the previous 54,000 euros
  • the simultaneous increase in the top tax rate from 42 percent to 45 percent
  • Raising the wealth tax from 45 percent to 48 percent with a threshold of 250,000 euros instead of the previous 256,303 euros
  • the waiver of the property tax
  • a higher taxation of inheritances
  • the abolition of the final withholding tax

Some points, such as the change in inheritance tax, are not yet explained in the concept presented. It is clear, however, that top-earners, according to the will of the SPD, should dig deeper and, above all, relieve people with low incomes.

In addition, relief on social security contributions is planned. In addition to the reintroduction of the equal funding of health insurance contributions, the SPD has provided a subsidy from the budget for social security contributions for low-paid workers. For people with incomes between € 451 and € 1,300 gross, contributions to pension, unemployment, health and long-term care insurance are expected to rise more slowly, resulting in higher net incomes.

Relief of low earners with Riester pension and occupational pension

Shortly before the end of this legislature, the government has already enforced a discharge of low-paid earners at retirement age. Anyone who later only has pension entitlements below the basic level of security must therefore not offset benefits from a Riester or company pension up to a tax allowance of € 202 with the social benefits.

Criticism of the tax concept by Martin Schulz

The comprehensive tax plans of Martin Schulz have received criticism across the board. The president of the German Chamber of Commerce and Industry (DIHK) Eric Schweitzer fears above all a burden of medium-sized companies. He warns the Neue Osnabrücker Zeitung that this is hampering innovation and investment. State Spokesman for the Federal Ministry of Finance, Jens Spahn, complains in the Passauer Neue Presse newspaper that Schulz’s plan to ease lower incomes would go nowhere . These “pay today indeed no solidarity surcharge.” The soli must therefore be abolished for all, including the middle class.

For the left, however, the tax concept is not far enough. Dietmar Bartsch called the waiver of the wealth tax in the morning magazine of ARD and ZDF despondent . Also in the relief of lower and middle income is too little planned.

December 24, 2018 Jimmy Chadwick