With contrasting visions for tax policy, the outcome of Germany’s upcoming elections will significantly shape the country’s economic landscape and fiscal trajectory. While conservative parties push for tax relief, particularly for high earners and corporations, left-leaning parties emphasize wealth redistribution through increased taxation on the affluent. However, tax reform proposals vary significantly across all parties.

The Left Party pushes for steep tax hikes on the wealthy, raising the top rate to 53 percent for incomes above EUR 85,000 and up to 75 percent for millionaires, while easing taxes for those earning under EUR 7,000 per month. It also seeks a higher basic tax-free allowance and a progressive tax on capital gains.

The Greens remain vague but focus on reducing taxes for lower earners while integrating the solidarity surcharge into income tax, increasing high-income contributions. They also propose tax credits for low earners and single parents, along with social security levies on capital income.

The SPD aims to ease the tax burden for over 95 percent of taxpayers by increasing the basic tax-free allowance and raising the top tax rate from 42 percent to 45 percent and the Reichensteuersatz (i.e., the so-called rich-tax) rate to 47 percent.

The CDU/CSU wants tax relief across all income levels, phasing in reforms over four years. The top tax rate would apply from EUR 80,000 instead of EUR 68,430, and the solidarity surcharge - which currently only has to be paid by top earners and companies - would be abolished.

The FDP seeks to flatten tax progression, delay the top tax rate to EUR 96,600, and like CDU/CSU, abolish the solidarity surcharge. It also wants to raise the basic tax-free allowance and the saver’s allowance for capital income.

The AfD advocates for a radical tax overhaul, including scrapping the solidarity surcharge, simplifying income tax brackets and lowering tax rates, and significantly increasing the saver’s allowance. It also proposes shifting from marital to family-based taxation and reduce tax write-offs.

The BSW suggests setting the tax-free threshold at the poverty-risk level, around EUR 16,000, with relief for incomes up to EUR 7,500 per month, while targeting large fortunes.

The Wealth Tax Debate: Reintroduction or Rejection?

The revival of a wealth tax is a divisive issue among parties. The SPD supports taxing assets above EUR 100 million, while the Greens focus on billionaires. Both parties also want to advocate the introduction of a global wealth tax, similar to the one advocated by economists Gabriel Zucman and Thomas Piketty.

The Left’s proposal is broader, taxing individuals with assets above 1 million euros, with rates reaching 12 percent for billionaires, topped by a special one-time wealth tax, also on a graduated scale, that would only impact Germans sitting on fortunes worth more than EUR 2 million.

The BSW also supports a tiered wealth tax system, starting with a rate of 1 percent for assets of EUR 25 million or more, up to 3 percent for assets of EUR 1 billion or more.

Conversely, the CDU, FDP, and AfD firmly oppose the reintroduction of a wealth tax. These parties argue that such a tax would deter investment and economic growth.

Inheritance Tax: A Split Approach

Party stances on inheritance tax further reflect ideological divisions. The AfD seeks its complete abolition, while the CDU/CSU and FDP advocate raising tax-free thresholds to reduce the tax burden on heirs.

In contrast, the SPD and the Greens favor higher taxes on large inheritances, particularly for business assets. The Left Party and BSW propose a uniform inheritance tax system to ensure that wealth transfers are taxed equitably.

For a comprehensive analysis of party positions on wealth and inheritance taxes, refer to the latest study by the Institut der deutschen Wirtschaft.

Fiscal impact of the tax plans

The ZEW (Leibniz Centre for European Economic Research) estimates tax revenue losses from parties’ tax plans, with the FDP´s proposals costing EUR 116 billion, the AfD’s proposals EUR 97 billion, followed by CDU/CSU’s at EUR 47 billion.

The tax plans of the SPD, Greens, Left, and BSW would have a smaller fiscal impact or could even generate additional revenue - ranging from EUR 1–4 billion for the SPD, Greens, and BSW, to EUR 46 million under the Left’s proposal - due to their focus on taxing wealthier individuals.