Mr Merz: Out of Office

Photo by Michael Kroul on Unsplash

Dear Reader,

If this government doesn’t manage to win another term in office four years down the line, then something extraordinary has gone wrong. In giving themselves almost limitless amounts of cash to spend without having to raise taxes, the Merz administration has set the conditions for four years of fun. The tab will be picked up by future leaders.

This week, Finance Minister Lars Klingbeil (SPD) announced tax rebates for businesses that will enable them to deduct 90% of the price of physical investments over the first three years, as long as they purchase these machines in the next three years. Meanwhile, there are also sweeteners for the car industry, with the government raising the value of an EV that is tax-deductible. The system is designed to get companies to start investing cash as quickly as possible and thus pull the German economy out of a slump that started back in 2018.

Starting in 2028, Klingbeil will successively reduce the corporate …