Chancellor Friedrich Merz Blocks SPD Tax Reform and Criticizes FCAS Project

Chancellor Friedrich Merz called for an end to discussions about further increasing fiscal burdens, constituting a clear counter to the demands of the SPD. In an interview for the podcast „Machtwechsel”, conducted ahead of the upcoming CDU federal conference, the chancellor stated that the German tax system has exhausted its possibilities. According to the head of government, the combined total of the tax on the wealthiest, church tax, and the solidarity surcharge means that the effective burden on high incomes is nearly 50 percent. Merz used a suggestive metaphor, stating that the quote „the lemon has already been squeezed quite hard”, which closes the path to compromise on this issue. Since the tax reform of Gerhard Schröder's government in the early 2000s, the debate on fiscal justice and upper tax rates regularly returns as a main point of contention between German Christian democracy and social democracy. An equally important point of the chancellor's address was criticism of the FCAS program. Merz pointed to existential problems in the project's requirement profile, being carried out jointly with France. The chancellor warned that if a common position on technical issues cannot be reached, maintaining this initiative further may prove impossible. He emphasized that the dispute is not political in nature but stems from constructional and operational differences that prevent building an aircraft meeting the needs of both armies. This stance may cause tensions on the Berlin–Paris line, as this project was treated as a foundation for European defense autonomy. „The lemon has already been squeezed quite hard. Nothing more can really be done.” — Friedrich Merz In the background of the tax dispute, an initiative by CDU Secretary General Carsten Linnemann emerges, proposing a profound tax reform to relieve the middle class. Although the SPD expressed preliminary approval for relief for the moderately wealthy, the social democrats demand in return that these changes be financed through higher taxation of heirs to large fortunes and individuals with the highest earnings. The chancellor categorically opposes such a scenario, which may herald an approaching crisis within the governing coalition. Merz is consistently building an image as a defender of economic stability ahead of the party conference, where he plans to strengthen his position as the leader of the Christian democrats.

[{"aspekt": "Taxes for the wealthiest", "przed": "Nearly 50% (currently)", "po": "SPD proposal: increase, CDU: no change"}, {"aspekt": "Taxes for the middle class", "przed": "High progression", "po": "CDU postulate: significant reduction of burdens"}, {"aspekt": "Inheritance tax", "przed": "Current rates", "po": "SPD postulate: taxation of large fortunes"}]

50% — is the total burden on the highest incomes in Germany

Left-wing media emphasize the need for social justice and claim that Merz protects the wealthiest at the expense of underfunded public services. | Conservative media support Merz, arguing that further tax increases will stifle investment and lead to capital flight from Germany.