High inflation jeopardizes Germany's stability

Christian Lindner

"Our country is groaning under galloping prices," said Lindner.

(Photo: IMAGO/Christian Spicker)

Berlin The height inflation endangers federal finance minister Christian Lindner according to the stability of Germany. "Our country is groaning under galloping prices," he said FDP-Chairman on Thursday in the Bundestag.

Inflation has recently risen faster than it has in decades. "Inflation is a threat to wealthsocial security and the stability of our country.” Fighting them is therefore a priority.

With the so-called Inflation Compensation Act, the federal government wants to help ensure that demand does not collapse completely and that there are contagion effects in the economy among service providers and retailers.

"48 million citizens will benefit." This will stabilize purchasing power. For a family of four with two children and an annual income of 56,000 euros, an additional burden of 680 euros should be averted.

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The planned law, which the Bundestag discussed for the first time on Thursday, is intended to combat so-called cold progression. This occurs when the tax system is not adjusted to inflation. Taxpayers can then slip into a higher tax bracket in the event of wage increases, for example, and therefore have less net money available than before. This is now to be adjusted for 2023 and 2024.

According to the Ministry of Finance, the adjustment will result in lost tax revenue of 12.2 billion euros in 2023 and almost 18 billion in 2024. The exact amount of the adjustments is to be determined in autumn when expert reports are available.

The wealth tax should not be adjusted. In Germany the top tax rate is 42 percent, but a surcharge is levied on particularly high incomes, so that a total of 45 percent is skimmed off. This wealth tax applies from an income of 277,826 euros - and should remain there in 2023 and 2024.

CDU budget expert Mathias Middelberg said the plans were correct, but also a matter of course. "That's a good building block in this relief package." The state has around 50 billion euros in additional income from inflation, almost half of which is accounted for by the federal government.

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