What is Section 80 of Income Tax

Increase in the top income tax rate from 42 percent to 49 percent - Federal Council does not agree (896th meeting on May 11, 2012)

Application from the states of Rhineland-Palatinate, Baden-Württemberg, Brandenburg, Bremen, North Rhine-Westphalia and Hamburg

The motion was already dealt with at the 892nd meeting of the Federal Council on February 10, 2012 and referred to the committees. It was again on the agenda of the 896th meeting of the Federal Council on May 11, 2012. It was rejected.

Extract from the application by the federal states:

In view of the state of the public finances and from the point of view of equity, the Federal Council considers a higher contribution from higher earners to the financing of the community to be indispensable. Small and medium incomes, however, may no longer be burdened more heavily with taxes. That is an imperative of political decency and fairness. Raising the top tax rate is therefore a suitable means of making higher income available to the state for debt reduction. Especially since the tax burden on high earners has been noticeably lessened in the past. Since the end of the 1980s, the top tax rate has been reduced from 56% to currently 42% (or 45% for income subject to the wealthy tax rate). According to the "Taxing Wages - Edition 2010" study by the OECD, those earning higher incomes in particular have benefited from the lower tax burden in recent years, while low-wage earners in Germany are sometimes significantly more taxed than in comparable countries. An increase in the top tax rate would make a contribution to a more equitable distribution of burdens and thus also serve to maintain social peace.

The aim is to achieve a top tax rate of 49% from an income of € 100,000.

An increase in the top tax rate in the proposed way would - without affecting large parts of the population - lead to additional annual tax revenues of at least 5 billion euros.

Negative economic effects are not to be expected, because the lowering of the top tax rate from 53% to 42% did not have any significant effects on the economy. In an international comparison, the Federal Republic of Germany would by no means stand in isolation with higher taxation of top earners to finance the budgetary burdens caused by the crisis. In addition to Great Britain, France, Ireland and Iceland have adjusted their tax rates upwards. The southern European countries Portugal and Greece have also increased their tax rates against the background of ailing public budgets.

The lead finance committee recommended that the Federal Council adopt the resolution.
The Economic Committee recommended that the Federal Council not adopt the resolution.

In its 896th meeting on May 11, 2012, the Federal Council decided not to adopt the resolution.


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