The surprising suggestion by the Five Economic Wise Men to raise taxes for high earners in the middle of the crisis is remarkable. Because such redistribution fantasies have so far been left to politicians for good reasons. In the past, the German Council of Economic Experts primarily developed ideas to strengthen growth.
In Gerhard Schröder's red-green government, the wise men were the main inspiration for both Agenda 2010 and the massive tax cuts for companies and citizens that were implemented at the time. Even during the financial crisis, the advisers to the Merkel government at the time helped to prevent the impending collapse of the banking system and to provide targeted support for the economy after the crash.
This supply-oriented orientation benefited Germany as a business location. But even in the days of the grand coalition, the advice of the wise went mostly unheard. And the Social Democrats, in particular, were increasingly struggling with their predominantly regulatory orientation.
Over the years, the SPD – supported by the Greens since coming to power – cleverly ensured that this most important group of advisers was composed in a way that was more agreeable to them. With the current report, this seed now seems to be growing.
It is well known that the SPD and the Greens want a higher top tax rate. Now they can refer to the economic wisdom. The postponement of the compensation for cold progression, which was also suggested in the report, also fits in perfectly with the concept of the two coalition partners who are willing to spend.
Because if it sticks to the fact that every salary increase - even if it doesn't even compensate for inflation - leads to increasingly severe taxation, the rise in prices will ensure that the public coffers are full. For companies as well as for citizens, however, such a tax policy would exacerbate the crisis - and for the FDP it would be deadly.