Germany's SPD Split On Top Rate Of Income Tax

by Ulrika Lomas, Tax-News.com, Brussels

15 September 2011

Just as the Social Democrats (SPD) finally united on their tax plans, the party’s radical left wing raised its head above the parapet, calling for even greater tax rises for the country’s wealthiest, demanding notably the introduction of a 52% top rate of income tax.

Dashing the party’s determined efforts to present itself as a serious alternative to the current black-yellow coalition government in the run up to the 2013 elections, announcing moderate and acceptable tax rises, a leftist faction has rebelled and drawn up a working paper, ahead of the party conference in December, calling for a top rate of income tax in Germany of 52% - 3% above the party’s planned rise to 49% outlined in its proposals.

In their paper, the left wing recommend that individuals with annual income in excess of EUR150,000 are subject to a 3% “rich tax”, arguing that such a measure is in keeping with a modern and fair tax concept.

Only a matter of days before, the Social Democrats had proudly unveiled details of their fiscal plans, in which the party pledges to abolish the tax break currently benefiting hotels in Germany, to increase the top rate of income tax to 49% above EUR100,000 in annual income, and to increase the government’s nuclear fuel tax.

Other proposed fiscal measures include plans to cut subsidies by around EUR15bn, to clamp down on tax evasion, to reintroduce wealth tax in Germany and to reform inheritance tax.

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