Tax policy lacks ambition

Especially, the tax policy lacks ambition in our view. Despite surging tax
revenues (2013 to 2017: +18.5% in total; 2017 to 2021: 17% or EUR 93.6 bn in
total to EUR 858 bn under present law, according to official estimates), planned
general tax cuts amount to about EUR 18 bn only (without the measures to tax
incentivize private investment in housing construction, R&D and digitalisation).

Furthermore, there is a marked bias in the allocation of the tax cuts. While
families as well as low- and middle-income earners will benefit substantially,
(single) higher earners and, in principle, corporate Germany, too, are left out in
the cold. Increased family benefits (child benefit, child allowance) will amount to
EUR 8 bn.

The first step of the abolishment of the solidarity surcharge (soli)
shall reduce the tax burden by EUR 10 bn (in total 2020 and 2021). However,
this measure is again focused on middle-class taxpayers, as only 90% of all
taxpayers shall benefit. People in the top decile are more or less excluded in the
first step, albeit they have to pay the bulk (about 55%) of the income tax. Thus,

while the head of single earner family with two children who has a (gross wage
or salary) income of EUR 108,000 p.a. Can look forward to a EUR 1,951
reduction of his tax bill, a single with the same income can only expect EUR 293.