CDU leader Friedrich Merz has proposed a comprehensive corporate tax reform to make the economy more competitive. This includes a separation between the taxation of companies and private households, the opposition leader told the “Handelsblatt” in an interview.

“This means: All companies, regardless of their legal form, will only be taxed according to a uniform corporate tax law, and partnerships will no longer be taxed according to income tax.”

Merz argued that too few entrepreneurs were making use of the previous option to pay income tax or corporation tax because it was too complicated. Trade tax, corporate tax and income tax for entrepreneurial and commercial income should therefore be incorporated into an understandable corporate tax system. According to Merz, the competitiveness of companies would be guaranteed with a tax rate of around 25 percent.

The state would therefore have to expect less income of initially 20 billion to 30 billion euros. “But of course competitive corporate taxes will also lead to more growth and thus more revenue. That’s difficult to quantify. But one thing is clear: if we leave everything as it is, we’ll lose a lot more in the medium term.”

Fewer citizens should pay the top tax rate

Merz also proposed changes to the taxation of private individuals. The question is not whether the top tax rate is 42 or 45 percent, but rather how many citizens have to pay it. “The tax rate of 42 percent is already due today for taxpayers who earn one and a half times the average income. This already affects skilled workers. It used to be fifteen times higher,” said the Union parliamentary group leader.

There was immediate opposition from the traffic light coalition. The deputy parliamentary group leader of the Greens, Andreas Audretsch, criticized the fact that the proposed reduced revenue was not counter-financed. “Mr. Merz’s make-a-wish proposal is so dubious that one has to have doubts about its seriousness and ability to govern.”