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Merkel reportedly promises FDP tax cuts

The Local · 22 Jun 2011, 10:40

Published: 22 Jun 2011 10:40 GMT+02:00

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According to sources within Merkel’s centre-right coalition on Wednesday, her conservative Christian Democrats and the pro-business FDP plan to announce next month their intention to lower the burden on taxpayers by up to €10 billion ($14 billion).

The business daily the Financial Times Deutschland reported earlier that Merkel had agreed to the tax cuts as a concession to the new leader of the Free Democrats, Economy Minister Philipp Rösler. The FDP has long pushed for lower taxes and is currently wallowing at all-time lows in opinion polls.

The cuts will reportedly be targeted to help the middle class and small to mid-sized businesses known as the Mittelstand and could take effect just before the 2013 election.

However, there could be pressure from Merkel’s conservatives to put budgetary consolidations ahead of cuts aimed to help boost the flagging FDP’s fortunes.

And any tax cuts would require the approval of the upper house of parliament, the Bundesrat, where the centre-right coalition no longer has a majority. It would therefore need the support of the centre-left opposition to push tax code changes through, but the FTD reported that members of the Social Democrats had already expressed scepticism for lowering taxes.

Story continues below…

DPA/The Local/mry

The Local (news@thelocal.de)

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Your comments about this article

11:07 June 22, 2011 by auniquecorn
Well, there they go, screwin us again, Germany does´nt have a middle class, 99 percent poor and 1 percent rich.
11:42 June 22, 2011 by basske

You can't be serious... "99% Poor" -- what kind of nonsense is that?

You apparently have a strong bias of some sort against Germany. What does this comment add to the article?
12:00 June 22, 2011 by Traveler33
Its simple economics, if you lower taxes you let people keep more money in their wallets which they then spend that money buying a new computer or a new car or something that needs to be produced, that new thing that is being produced needs to be built which means it will need labor. That labor pays taxes and thus the cycle repeats and grows. In then end you have to ask yourself this, would the government make more money charging a 30% tax on 10 million workers or would it make more money charging 25% on 15 million workers. The larger your tax base is (ie jobs) the more money the government will make. If you lower your tax base by having excessively high taxes, you lower your tax base and thus you lower the amount of money the government brings in taxes.

Its all economics.
12:16 June 22, 2011 by So36
Voodoo economics maybe. The flaw in your little trickle-down plan is you can't keep cutting the tax rate to zero. Though the Tea Party would no doubt like to try.
12:38 June 22, 2011 by ChrisRea

The model you describe works when you keep all your money in your economy. What happens when instead of using your savings to buy a computer made by German workers, you buy an iPad which needs to be imported and so it does not create a job in Germany?

It is not that simple. However, I also think this tax cut is a good thing.
13:39 June 22, 2011 by frankiep

Who said anything about cutting the tax rate to zero? Hyperbole much?

What do you have against people being able to keep more of what they earn for themselves?

I don't understand how any sane, compassionate person could be against allowing average people and small and mid-sized businesses to keep more of what they earn. In the case of the average, middle class wage earner, being able to keep more of what they earn means that they then have more money left over to pay for additional goods and services. In the case of small and mid-sized businesses, it means that they have more left over to hire new people, develop new products, expanded into new markets, etc.

These two groups are the engines that drive any healthy economy. The more you take away from them, the weaker they, and the economy, become - in which case they will then become even more reliant on the state to provide for (control) them. Maybe that's what you want though....
13:55 June 22, 2011 by So36
The post I responded to clearly said the cycle repeats. Where does it end then Mr Compassion? Perhaps where there's not enough tax revenues for roads, schools and health care? Compassion indeed. And for the record, I'm perfectly okay paying what I do in German taxes now. Income tax is at an all-time low here, but you probably didn't know that. http://www.spiegel.de/fotostrecke/fotostrecke-58351-2.html
15:21 June 22, 2011 by ame64
This has nothing to do with economics. It is simply trying to sace their political skins. Both teh CDU and te FDP know they have zero chance of winning the next election if they dont do something good for a change.

Thats all it is, not trying to help the "common" people, but simply saving themselves.
23:08 June 22, 2011 by finanzdoktor
Since we are talking about economics, we might want to remember such items as marginal propensity to consume or save, dependent on future expections, competitive advantage(s), etc....versus the hyperbole being ventilated by both sides of the argument (bet I get in trouble with most for saying this).
18:52 June 23, 2011 by NoAngryTeen
"if you lower taxes you let people keep more money in their wallets which they then spend that money [sic] buying a new computer or a new car or something that needs to be produced". Not if they're smart. If they're smart, they'll use the money to pay down their debt or put it into savings. And if they do spend the money, they won't spend it on luxury items like cars and computers, they'll spend it on the basic essentials that are getting more expensive in Germany, like food and electricity.
12:21 June 24, 2011 by CaSimone
Tax cut would be great... as for some comment... Let me enlighten,

Poor, is ghettos, it's filth and illness untreated. It is a point proven that there are those living in Germany who have no clue what really poor is. Truly ignorant when someone barks to complain as if they are "poor". Everyone in this country is well off..... America even has thousands in secret slum shack fields, ill turned away uninsured, homes lost to medical bills needing to be paid... Germany is unbelievably well off, and though it might demand a bit more, taxes and more governing interventions, it has created a society that is a cocoon of safety for everyone (those who earned it and those who didn't). An example that can be considered a global model. Some of people need step back, look at the "WORLD", reevaluate yourself and be grateful.
16:48 June 24, 2011 by neunElf
"America even has thousands in secret slum shack fields, ill turned away uninsured, homes lost to medical bills needing to be paid.."

Do tell...

No one is "turned away" from receiving medical care in the USA, it's the law! A hospital must provide the same level of care whether someone has the means to pay for it or not! People can certainly be denied health insurance, but not health care.
11:23 June 27, 2011 by CaSimone
Do tell? Here is just one example below, take into account this is a more public example. Their are multitudes in woods and underground, never easily seen, but do search, something about it will turn up. Try key words like mole people, underground, Vegas Under ground slums, NY underground..... NJ Pinelands homeless....

As for medical, perhaps a sprain, an injury like a cut finger or broken leg, such is treated, but serious illnesses are not offered real treatments towards a cure. Do some research.

Now don;t get me wrong, I love the US, there are aspects of it that make it a great country, but I am fair to a fault, for it strips me of being blindly loyal, cause I side with "reality".

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