Germany/France: Not on the same tax page?

Germany/France: Not on the same tax page?

In Germany, a tax incentive plan is proposed by the government to attract skilled workers, while in France, punitive tax rates are being considered for high earners by the parties of the left who fared well in last week’s second round of National Assembly elections.

Why it matters: German Finance Minister Christian Lindner's tax incentive plan aims to attract skilled workers in critical sectors. The proposal offers a declining tax rebate over three years to newly arrived skilled workers. Critics argue it discriminates against German nationals and long-settled foreign workers, suggesting improvements in childcare and healthcare instead. Chancellor Olaf Scholz and Economy Minister Robert Habeck support the initiative. Meanwhile, some on the left in France want to hit the “rich” with new, punitive tax rates.

Meanwhile in France: The New Popular Front (NPF) was put together from the Socialists, the Greens, the Communists and the radical left-wing France Unbowed party to stop the rise of Marine Le Pen’s populist right-wing National Rally, which picked up the most votes in the first round of the elections on June 30, but only came third in the second round, last Sunday.

NPF leaders continue to discuss who they should propose to President Macron as prime minister. The leader of France Unbowed, Jean-Luc Mélenchon, is pushing hard for the nomination, but he is so extreme it is unlikely that he could put any sort of government together. Mélenchon wants an immediate reduction in the retirement age from 64 to 60, a cap on prices for essential goods, a 14% increase in the minimum wage and spending commitments of at least €150bn over three years.