Volker Wieland: Plans of grand coalition may threaten sustainability of economic growth

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.

Volker Wieland
Wirtschaftspolitisches Zentrum, Kommentar Nr. 19
"Für eine zukunftsorientierte Wirtschaftspolitik"
(PDF)