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Social affairs: Family Minister Paus defends cold progression

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In the dispute over income tax, SPD Minister Paus opposes the proposal of her FDP colleague Lindner. She fears further discrimination against socially disadvantaged citizens.

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Federal Family Minister Lisa Paus has criticized Finance Minister Christian Lindner’s plans to abolish the so-called cold progression in income tax.

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“The abolition of the cold progression benefits above all the top earners and is not a suitable instrument to support families in lower and middle incomes in a targeted manner,” said the Green politician of the “Neue Osnabrücker Zeitung”. She clearly advocates “keeping away from cold progression and using other levers for targeted support, such as higher child benefits”.

Cold progression is a kind of creeping tax hike, when a pay rise is eaten up by inflation but still results in higher taxation. FDP boss and Finance Minister Lindner has set the goal of eliminating this effect.

Paus warned that this would lead to shortfalls in revenue “in the tens of billions,” especially for federal states and municipalities. “This weakens in particular the funds for daycare centers, educators and cheap local transport,” she said. The current crisis has a dimension that cannot be completely compensated for by the state. “It is important that we support those who are threatened existentially. These are primarily low-income families and pensioners.”

The Hartz IV standard rates, child benefit and housing benefit would have to be increased. “We can also increase the child allowance for families who have to increase their numbers,” said Paus. The minister pleaded for a “relevant increase in child benefit”. Middle-income families would also benefit greatly from this. “I think that’s the better instrument. It’s not about a one-time payment, but about a permanent increase in child benefit.”

In addition to the push for cold progression, Lindner had also announced proposals for a higher basic allowance and an increase in child benefit.

Source: Stern

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