CDU Approves Dramatic Tax Reform Plan

Germany’s opposition Christian Democrats (CDU) on Tuesday approved the radical tax reform concept of their deputy leader Friedrich Merz at a party congress in Leipzig. The Merz plan would establish a dramatically simplified progressive income tax system in Germany. There would be three tax rates of 12, 24 and 36 percent and the first €8,000 ($9,578) earned would be tax free. To pay for the considerably lower tax levels, most tax breaks would be eliminated. Since the conservatives remain in the opposition in the lower house of parliament, the CDU tax proposals have little chance of becoming reality for the time being. However, the CDU controls the upper house, which represents Germany’s 16 federal states, and the party could try to use the tax plan as leverage as it works with the center-left government of Social Democrats and Greens in a parliamentary mediation committee on tax cuts.