The Parties’ Income Taxation Reform Proposals for Germany’s 2021 Federal Election

A comparison of the revenue, employment, and distributional effects of the parties’ programs for the 2021 federal election in terms of income tax and solidarity surcharge shows that all parties want to ease the burden on households in terms of income taxation. However, the amount of relief varies between the parties. There are also similarities and differences in the structure of the relief. All parties want their reform plans to improve things for the middle-income strata of the population. For upper incomes, however, the effects differ not only in their amount but also in their direction. All parties would create positive incentives for gainful employment. However, the associated increase in tax revenue could compensate only partially for the reduction in government revenue triggered by a lower tax burden for a very large part of the population.