Paul Kirchhof, an ex-Constitutional Court judge who had been Merkel’s pick for finance minister ahead of the 2005 election, announced a tax code overhaul on Monday night that includes a controversial 25-percent “flat tax” on all incomes.
The plan has won some sporadic endorsement from individual members of the pro-business Free Democrats (FDP) and Merkel’s own conservative Christian Democrats (CDU), but also fierce opposition.
But Alexander Dobrindt, general secretary of the CSU, which is the CDU’s Bavarian sister-party, told daily Die Welt’s Wednesday edition that while simplifying the tax code – as Kirchhof’s plan would do dramatically – was interesting, it would be unfair.
“The complexity of life is not reflected in this tax proposal,” he said. “The idea is exciting that a tax declaration fits on a small piece of paper. But whether it is fair is what I’m doubtful of.”
He cited the example of the commuter tax relief payment, which he said had proved itself as an effective tool but which would be scrapped under Kirchhof’s plan.
CSU deputy parliamentary leader Michael Meister praised Kirchhof’s recommendations but said the party would not adopt them.
The centre-left Social Democrats, environmentalist Greens and socialist party The Left all rejected the plan, as did the German Taxpayers’ Union.
A flat tax is a particularly controversial proposal that would benefit high-income earners, who currently pay a steeper rate on the amounts they earn within higher income brackets – the approach used by most western countries as a fair redistribution method.
Kirchhof originally proposed the 25-percent flat tax during the 2005 election campaign that pitted Merkel against former Chancellor Gerhard Schröder of the SPD. Merkel initially endorsed Kirchhof’s proposal, whereupon her approval ratings plummeted. She eventually ditched the plan and just scrapped through with a narrow victory despite her originally soaring popularity.