Germanys Coffers Are Overflowing, But No One Is Talking About Tax Cuts

[question everything]

The German government never had so much money or so many ideas about how to spend it. The one thing that isn’t being discussed is giving it back to taxpayers.

Tax cuts—a fixture of the political debate in the U.S., where the government hasn’t balanced its books in decades—are barely on the agenda here, even though Germany’s next government is expected to post a consolidated budget surplus of roughly €50 billion ($62 billion) between now and 2021, according to finance ministry calculations.

(snip)

The aversion to discussing tax cuts on business profits and personal income is surprising, many economists argue, because Germany—despite its cultivated self-image as a stronghold of fiscal rectitude—has among the highest taxes in the world and a habit of heavy state spending.

(snip)

Lower corporate and income taxes could lead to higher spending and investment, boost imports and lower the nation’s giant trade surplus, economists say. That would please trading partners such as the U.S. which have chafed at Germany’s record run of current-account surpluses—a measure of excess savings in the economy.

Yet the perception of tax cuts in the country’s political mainstream ranges from slightly shameful to outright evil. Many conservatives see them as overindulgent toward voters, while the center-left views them as morally indefensible gifts to the rich. All parties, with the exception of the pro-business Free Democrats, favor a high degree of redistribution.

“You need high taxes in order to be civilized,” said Sven Giegold, who represents Germany’s Green Party in the European Parliament. “We are very far away from the government having too much money.” The federal audit office, meanwhile, has expressed concerns about the fiscal challenges of providing for an aging population and infrastructure investment.

Only one-fifth of Germans think the federal surplus is reason to cut tax, according to a poll in July by Infratest Dimap. More than half said the government should spend the money on investments, and another fifth wanted to pay down the national debt faster.

(snip)

To be sure, taxes in Germany, as in other European countries, cover a range of highly popular social benefits, including universal health care and state pensions. The last time income-tax rates dropped in a big way was under Ms. Merkel’s predecessor, Chancellor Gerhard Schroeder, who cut taxes in the early 2000s in a bid to boost a then-stagnant economy. Most individual income over €54,000 is effectively taxed at about 44% for single taxpayers, with a surtax on earnings over €256,000.

More..

https://www.wsj.com/articles/germanys-coffers-are-overflowing-but-no-one-is-talking-about-tax-cuts-1518868801

[Ohiogal]

1. How about that!

A country that is fiscally responsible and a government that actually works FOR the people!

I'm jealous.

[True Dough]

2. But, but, but...

What about all those immigrants "ruining" the country???

What about Germany's "disastrous" foray into renewable energy???

[Wellstone ruled]

3. If one has been following what Merckel and Company have been saying.

They are preparing for a Major World Economic Shake out to come within two years. Germany does not want to lose their Dominance in top quality Tech and Manufacturing to China. They are already planning some type of payment system for those workers who will be replaced by Robotics and other state of the art things coming at them.

[genxlib]

4. The things you do

When you aren't spending all your wealth on the Military...

[DFW]

5. Beware of some serious BS in the article, though the statistics seem accurate

But other statements, such as "To be sure, taxes in Germany, as in other European countries, cover a range of highly popular social benefits, including universal health care....." are made-up fantasy.

Germany does NOT have universal health care, and just by paying high taxes (I pay a de facto 50% here), it by no means gives you automatic access to health care. I get no health care from the German government at all, and never will, no matter how much I pay them in taxes. Zip. Nada. I was referred to one of their patchwork health care companies, which quoted me, based on pre-existing conditions, €2500 a month, or about $36,000 a year at current exchange rates to have health insurance in Germany. My wife, a German citizen, is a social worker. She had to deal all the time with poor, out-of-work Germans who had neither a job nor health insurance. There are several hundred thousand of them. Tiny, compared to the USA, to be sure, but they are there, and it is because health care here in Germany is NOT universal.

I don't know why so many Americans hang on to (and insist on continuing) this myth that Germany has universal health care, but it just doesn't.

The rep from the Greens made two statements, one of which I find highly speculative at best, and the other the issue that squarely nails why Germany only loosens the money up to their great peril. His first, “You need high taxes in order to be civilized," is little more than a campaign slogan. Enteignung NOW! Without a benevolent government to spend its revenues wisely, high taxes can just as easily leave you with Nicolae Ceauşescu or Robert Mugabe or Hugo Chávez. A rich dictator and an impoverished nation. I'd say, rather, you need civilized leadership in order for high taxes to benefit a nation.

On the other hand, his second statement, “We are very far away from the government having too much money,” is the real key here, as I see it. Sure, a $50 billion surplus sounds great. But in today's world, that can vanish in a puff of smoke. An economy can turn around with just one false move. Look what happened to us when Bush Lite got in instead of Al Gore. *poof!* instant deficit. €50 Billion is less than $1000 per German citizen. Of course, it's nice when it's in the plus column instead of the minus column, but it is not such an immense sum that they can turn Germany into paradise on earth out of petty cash. Giegold is absolutely correct here: for a government of a country the size of Germany, it is far from putting the government in a position of having more money than it knows what to do with.

To put it into perspective, it would be the equivalent of the USA having a surplus of $200 billion (we have roughly four times Germany's population). Trump just tossed us a $1.5 trilllion deficit for Christmas. If we suddenly got a $200 billion windfall by winning some galactic lottery, that wouldn't even plug one seventh of the deficit hole the Republicans just handed us.