German SPD leader Martin Schulz promises higher taxes for the rich

Germany’s Social Democrats (SPD), seeking to turn round their flagging election campaign, promised to raise the top income tax rate for the rich and abolish a flat-rate withholding tax on capital gains in a bid to win back working-class voters. “We’ll reduce the tax burden for small and medium-sized incomes and we’ll support families,” party leader Martin Schulz told reporters yesterday. This step would help stimulate domestic demand and reduce Germany’s trade surplus by sucking in more imports from other European countries, he added.

“Our proposal is good not just for Germany but also for Europe,” Schulz added. Schulz hopes to unseat Chancellor Angela Merkel, who is seeking a fourth term, in Sept 24 national elections. But the centre-left SPD, currently junior partner in Merkel’s ruling coalition, has lost momentum since making initial gains after nominating Schulz as the party’s new leader in January.

By unveiling its tax plans, the SPD wants to put the issue of social justice at the centre of the election campaign, though the topic has not weighed very heavily so far among voters. Polls see a double-digit lead for Merkel’s conservatives ahead of the SPD. Schulz said the SPD would increase the top tax rate for employment income to 45 percent from 42 percent. To avoid higher taxes for middle-class families, the SPD also wants to lift the threshold from which the top rate applies.