The fiscal conditions were extremely well the moment, however, this would not last forever, Wieland warned. Therefore, the coalition partners should use this fiscal space for grwoth-friendly reforms. First and foremost, CDU, CSU and SPD should address the so-called "cold progression". The progressive income taxrate gives rise to “bracket creep” when inflation rates are positive, putting strain on middle-income groups, in particular. A reform of the income tax should be used to return the increase in tax revenue from bracket creep.
The complete commentary is only available in German.
Wirtschaftspolitisches Zentrum, Kommentar Nr. 19
"Für eine zukunftsorientierte Wirtschaftspolitik"