With the economy in the worst recession since World War II, both the centre-left Social Democrats and their conservative Christian Democratic rivals have decided the way to win the September 27 elections will be to appeal to voters' wallets and class solidarity.
Top party leaders voted unanimously for the plan at a meeting Saturday in Berlin.
At the heart of the party's election platform is a large tax increase on the rich and a tax cut for working-class Germans. The top income tax rate would rise to 47 percent from 45 percent. The ceiling at which that rate would apply would be dropped to €125,000 for singles and €250,000 for couples, compared to today's ceiling of €250,000 for singles and €500,000 for couples.
Chancellor candidate and Foreign Minister Frank-Walter Steinmeier said the party's plan showed that the SPD does not make “giant tax cut promises” that the country can't afford.
Though the tax hike proposal seems potentially risky, a poll last week showed 59 percent of Germans supported higher taxes on the rich.
The bottom tax rates would fall from 14 percent to 12 percent. Taxpayers who don't file a return or try to take any deductions would get an automatic €300 refund for singles, couples will get €600.
Steinmeier will officially present the platform at an SPD rally in Berlin on Sunday. Party members will get a chance to vote on the plan at the SPD's convention on June 14.
Other aspects of the party's platform include using some of the increased tax revenue for more spending on education and greater support for eastern German states, which continue to lag by most social and economic indicators 20 years after the fall of the Berlin Wall.
The market-oriented Free Democrats (FDP) slammed the SDP plan and said it ruled out the possibility the parties could govern together in a coalition, FDP head Guido Westerwelle told the Bild newspaper Saturday. The FDP has long argued across the board tax cuts will be more effective at stimulating the economy.