June 19, 2017
SPD to focus on inequality
The SPD is about to present the fiscal part of its election manifesto this week. As FAZ reports, it suggests that the SPD is going to focus heavily on inequality, which we think is probably a smart strategy in principle, except that we do not believe that the detailed programme itself will be radically different from what the CDU/CSU will offer. The paper quotes Martin Schulz as lambasting the low taxes paid by Germany’s richest families. To help middle class income earners he also promises to raise the threshold from which the highest tax rate will be effective. Another focus of the SPD’s campaign will be tax avoidance by large EU corporations, who are exploiting discrepancies among national tax regimes. Schulz is also quoted as saying that the SPD will campaign on three themes: inequality, innovation, and Europe. We thought it illuminating how he explained away two of the three consecutive defeats in state elections. In the Saarland, he said, the SPD lost because it failed to exclude an alliance with the Left Party; and in North-Rhine Westphalia the SPD lost because of its disastrous education policies.
A quiet campaign focusing on inequality and tax avoidance is, in principle, a good idea, as inequality has risen in Germany as well as elsewhere. People respond to these issues. But the problem is that the SPD has governed for 16 out of the last 20 years, during which period much of this inequality has arisen. And we fail to see the logic of a domestic campaign in favour of tax harmonisation at EU level since Schulz will not be able to force the issue unilaterally. We have yet to see a big issue on which the SPD offers a radical alternative. And since Schulz is not ruling out participation in a Grand Coalition, one questions the credibility of these pledges.