PdF on finance and taxes

The PdF wants to loosen the Schuldenbremse (debt brake) so that the federal government and the states can borrow more for investment. The platform argues that the current rule holds back spending on infrastructure, digitalization and climate protection.

The debt brake limits how much money the state may borrow. The PdF wants to raise this limit. The state should be able to borrow more. It should use the money for roads, networks and climate protection.

The federal government would be allowed to borrow up to 1 percent of economic output instead of 0.35 percent today, and the states up to 0.15 percent. The platform expects 30 to 35 billion euros of extra room per year. The cyclical component would take downturns into account more strongly, based on a Bundesbank proposal, and a transition period would apply after crises. A "Golden Rule Plus" would exempt debt-financed net investment from the borrowing cap. The platform also considers a special fund for large infrastructure projects possible.

The PdF wants to streamline the tax system: small special taxes would be dropped, VAT exceptions removed and tax returns prepared automatically. The platform justifies this with the system's complexity and heavy administrative burden.

The PdF thinks taxes in Germany are too complicated. Old small taxes should go. The tax return should be made automatically. People only check it and confirm with one click.

Special taxes described as outdated, such as the sparkling wine tax, would be abolished. Taxes whose purpose no longer exists would be renamed, adjusted or scrapped, and taxes that cost more to administer than they raise would be phased out. VAT would be 7 percent on food and 19 percent on everything else, with other exceptions removed. For tax returns, authorities, employers and banks would supply the data directly, so that confirming takes only a few minutes.

The PdF wants to reshape the income tax schedule so that low and middle incomes pay less and high incomes pay more. This includes a new 50 percent rate for very high incomes and automatic adjustment for inflation.

The PdF wants to change the tax on income. People with low or middle pay should pay less. People who earn very much should pay more. From 400,000 euros a year, a rate of 50 percent should apply.

The top rate would kick in at a higher income than today, which the platform says strengthens the middle class. An additional 50 percent rate would apply to annual incomes of 400,000 euros or more. Allowances and tax classes would rise automatically with inflation every year. The party wants this to prevent bracket creep, where pay raises are eaten up by higher tax rates.

The PdF wants to use legislation to stop tax avoidance, especially by large companies, and to give tax offices more staff. It also considers a minimum tax when businesses are transferred.

Some big companies use tricks to pay little tax. The PdF wants to close these gaps in the law. Tax offices should get more staff. A minimum tax could also apply when a company is handed on.

Legal ways of avoiding tax would be removed by law. More staff in tax offices would ensure the rules are followed. When businesses are transferred, a fixed share of the assets could become taxable; deferrals or silent state stakes would protect the companies' substance. Nonprofit associations and organizations would gain legal certainty by aligning their tax exemption with European standards.

The PdF wants to levy a wealth tax again. It points to growing wealth inequality and high public debt; the state is to gain more financial room.

The PdF wants a tax on large fortunes again. It says wealth is shared more and more unequally. The state should have more money this way. Jobs should stay protected.

The tax would apply uniformly to all types of assets. The platform notes that the earlier rule was suspended after a Federal Constitutional Court ruling and cites majority support among the population. Tax breaks, deferrals or silent stakes are meant to keep jobs and investment from being harmed. The revenue is also meant to ease the burden on future generations.

The PdF wants to scrap the Solidaritätszuschlag (solidarity surcharge) for companies immediately. According to the platform, its original purpose of funding German reunification no longer applies, and the levy reduces room for investment.

The Soli is a surcharge on taxes. It was once meant to pay for German unity. The PdF wants to end it for companies right away. Companies should then have more money to invest.

The surcharge is 5.5 percent on income and corporate income tax. The platform sees it as a burden mainly on businesses, including many small and medium-sized ones. Removing it is meant to free up funds for investment, innovation and future projects and to improve competitiveness.

The PdF wants companies to be able to deduct spending on energy-saving machinery and equipment from their taxes immediately and in full. This is meant to lower operating costs and speed up the replacement of outdated technology.

Many companies have old machines that use a lot of energy. The PdF wants to make buying efficient machines easier. Companies should deduct the cost from their taxes right away. Those who save energy should get more tax benefits.

The platform justifies the step with high operating costs caused by inefficient machinery. Besides the immediate full write-off, it plans energy-efficiency bonuses. Projects that can prove energy savings would receive direct tax breaks. This is meant to encourage companies to invest in better energy efficiency.

The PdF wants to push back unreported economic activity with a mix of tougher penalties, public education, digitalization and incentives. The platform sees the shadow economy as a drain on public revenue and on trust in the tax system.

Some people and companies work without paying taxes. This is called the shadow economy. The PdF wants to fight it with higher penalties. People who report themselves should be able to avoid punishment. Campaigns should explain why taxes matter.

The platform puts the shadow economy at about 481 billion euros for 2024, roughly 11.3 percent of economic output. Tax evasion would be punished more severely. Campaigns would show that taxes pay for education, infrastructure and social security. Digital and automated tax procedures are meant to make manipulation harder and transactions easier to trace. Voluntary self-disclosure with immunity from punishment would be encouraged so that businesses and workers return to the regular economy.

The PdF wants to replace Ehegattensplitting (joint tax splitting for married couples) with individual taxation plus a transferable allowance for families. Child tax allowances would drop to the constitutional minimum, with the freed-up money going to low-income families.

The PdF wants to change the tax for married couples. Each person should pay tax alone. Families should get a tax-free amount they can share. Support should depend on children, not on marriage. Poor families should get more money.

Under Ehegattensplitting, married couples are taxed jointly, which saves tax when incomes are unequal. The platform wants support to focus on children instead of marriage. Child tax allowances would be only as high as the constitution requires. The savings would be used to support disadvantaged households in a targeted way.

The PdF wants to exempt apprenticeship pay and working students' earnings from wage tax up to a cap. This is meant to ease the financial burden on young people so they can focus on their training or studies.

The PdF wants to help apprentices and students. They should pay no wage tax on their pay. This applies up to a certain limit. That leaves them more money.

The platform argues that young people in training or at university pay taxes despite low incomes. The exemption is to be capped, meaning it applies only up to a maximum amount. In the party's view, the measure also shows that society values education and vocational qualification. It is meant to promote equal opportunity and social fairness.