I'll tax rich Germans more, says SPD leader Schulz


UPDATE 1-I'll tax rich Germans more, says SPD leader Schulz

(Adds details on tax plan, background)
    By Michael Nienaber and Holger HansenBERLIN, June 19 (Reuters) - Germany's Social Democrats (SPD)
said on Monday they would tax the rich more and low earners
less, making a play to win back working-class voters as the
party seeks to revive a flagging election campaign.
    SPD leader Martin Schulz hopes to unseat Chancellor Angela
Merkel in the Sept. 24 election, but the centre-left party has
lost momentum in the polls since making gains following his
nomination in January.
    "We'll reduce the tax burden for small and medium-sized
incomes and we'll support families," Schulz told reporters.
    "Our proposal is good not just for Germany but also for
Europe," he said, adding it would help stimulate domestic demand
and suck in more imports from other European countries.
    Schulz said the SPD would increase Germany's top income tax
rate to 45 percent from 42 percent, while lifting the threshold
from which the rate applied to 76,000 euros($85,000) from
around 54,000 euros.
    The SPD, currently the junior partner in Merkel's ruling
coalition, would also raise the special income levy for those
earning 250,000 euros or more to 48 percent from 45 percent.
    The plans highlight the SPD's aim of putting social justice
at the heart of the election campaign.
    But the topic has yet to strike much of a chord with voters,
with opinion polls showing the conservatives led by Merkel, who
is seeking a fourth term in office, holding a double-digit lead.

    Schulz said the SPD plans meant families with small and
medium-sized incomes would pay 15 billion euros less in taxes
every year.
    The party also wants to replace the flat-rate withholding
tax on capital gains with a banded system so that income from
labour and capital would be taxed equally again.
    Introduced in 2009 by former SPD finance minister Peer
Steinbrueck to help fight tax evasion to countries like
Switzerland and Luxemburg, withholding tax is charged at 25
percent on private income from capital gains.
    Schulz said the SPD would exempt workers on small and
medium-sized incomes from the "solidarity tax" that Germany
introduced after reunification in 1990 to support its poorer
eastern states.
    The 5.5 percent tax, which brings in over 15 billion euros a
year, was originally envisioned as a short-term measure but has
been repeatedly extended despite opposition from some
politicians who say it has outlived its usefulness.
    The SPD's tax proposal is expected to be discussed and
adopted at a party congress next Sunday.
    The SPD would also boost infrastructure investment by 30
billion euros over the next four years to improve schools and
streets, he said.
    ($1 = 0.8931 euros)

 (Reporting by Michael Nienaber and Holger Hansen, editing by
Thomas Escritt and John Stonestreet)
 ((michael.nienaber@thomsonreuters.com; +49 30 2888 5085;
Reuters Messaging: michael.nienaber.reuters.com@reuters.netwww.twitter.com/REUTERS_DEwww.reuters.de))


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