"There's hardly a system in the world that hits you so hard if you work hard and want to have more money at the end of the month." It's not worth working more, says Reiner Holznagel. (Photo: © ginasanders/123RF.com)
Read aloud:
September 8, 2026
Reiner Holznagel, president of the Federation of German Taxpayers, criticizes the current tax policy of the federal government. He argues that the income tax system in Germany penalizes people who work more.
How effective is the German state? Andreas Ehlert raised fundamental questions at the "Politics in Dialogue" discussion series hosted by Handwerk.NRW ( the North Rhine-Westphalia Chamber of Skilled Crafts). "People don't expect the state to solve every single one of their problems. But they do expect the state to be there where it's needed and to consistently fulfill its responsibilities," explained the president of Handwerk.NRW. Schools should function properly, the infrastructure must be sound, and permits shouldn't take years to process. It's also about simple and understandable rules that give those who work, train, invest, and bear entrepreneurial risk sufficient freedom. And there are many major areas that need improvement.
If the state fails to function effectively in the long term, trust in democracy and the economic system erodes. The latter needs reliable framework conditions. "Our many partnerships, in particular, need competitive tax conditions, fewer reporting and documentation requirements, and incentives for legal employment and investment. We need framework conditions that make entrepreneurship truly enjoyable again," said Ehlert. The state must grant people more personal responsibility and freedom in deciding what to do with the money they have earned.
In Germany, national debt is growing, but not economic output, said Reiner Holznagel, President of the Federation of German Taxpayers . Most of Germany's finance ministers since Franz Josef Strauss couldn't manage with the money the state had previously collected. Even the debt brake, which was temporarily introduced, was quickly abandoned. What we've been experiencing since then is an unprecedented run on national debt. By the end of this decade, we will have incurred more than one trillion euros in new debt at the federal level alone.
The revenue situation isn't actually that bad: "We will most likely collect one trillion euros in taxes this year across all government entities. Municipalities will collect significantly more money, states will collect significantly more money, and the federal government will also collect significantly more money." But even that isn't enough. Compared internationally, the average worker is burdened very heavily. For every euro earned, they have to hand over 53 cents to public coffers.
Craft policy
Craft policy
Craft policy
The federal government promised tax relief. However, the announced ten billion euros are "virtually nothing," because a large portion of this tax relief consists of mandatory expenditures – and it doesn't even address bracket creep. Holznagel: "In Germany, we've created an income tax system that penalizes people who work more. There's hardly a system in the world that hits so hard when you're diligent and want to have more money at the end of the month." It simply doesn't pay to work more. This is also why generating economic growth is so difficult.
In addition, there are discussions about inheritance and gift taxes, sugar and tobacco taxes, and also packaging taxes. "The fundamental purpose of a tax is to finance the state's responsibilities, not to correct people's lifestyles," Holznagel emphasized. Therefore, it is important to save money. And the state must first and foremost examine its own spending. Here, priorities do not align with the reality of the budget. This alone will not solve the problem, but it is now important to take symbolic measures and start at the very top, tightening our belts. "We need cost savings at all levels, but above all at the federal level. Only then can I authentically justify far-reaching reforms in pensions, healthcare, and long-term care."
DHB now also available digitally! Simply click here and register for the digital German Crafts Journal (DHB)!
Newsletter
Write a comment