For example, they plan to reduce taxes by 10 billion. Their example is “family of four with 60k income gets a reduction of 600 in 2028”.
Germany’s GDP is 4470 billion. These 10 billion do not make any significant difference on the grand scale.
On the personal scale, for this family of four, its +50€ per month or +12,50€ per person per month. Also not much of a difference.
Inflation makes a bigger difference than that by 2028. Also, here I just account for the tax aspect. This family will face increased costs to pay for pensions and stuff and it might well be a net negative for them. I’ll wait for some professionals, like the DIW, to calculate that.
Okay, so you cannot give an example of what would be big. You also don’t give an example of what policy would have a big impact. That’s not constructive.
600 euro per household is not big. Would 1200 euro be big?
The €500 billion special fund for military spending had a big impact. For example, mortgage interest rates immediately jumped by 0,5%.
You cannot fix the German economy by fiddling with income taxes a little. There is also lots of things the German government cannot do (e.g., ECB interests rates, Volkswagen business strategy).
I believe the biggest lever they have is to build residential areas to reduce housing costs. That shows up in the reform package but only in vague terms:
Wohnungsbau: Es wird eine Wohnungsbaugesellschaft für bezahlbares Wohnen
(WBG) errichtet. Ziel ist es, vermehrt Wohnungen im bezahlbaren Preissegment zu
bauen, wo der Wohnungsmarkt auf Dauer nicht ausreichend bezahlbaren Wohnraum
bereitstellt. Die WBG soll den sozialen Wohnungsbau sowie den industriellen
Hochlauf seriellen Bauens unterstützen und insbesondere in Regionen mit
nachgewiesenem Wohnungsmangel tätig werden.
So they want to create some kind of association to build cheap housing. No timeline, no budget, no goals.
I fully agree with you. The housing market for low cost housing is failing and requires government intervention. Maybe the details of this measure will be published once the parliament works out the laws. Budget and timeline, sounds like that’s the parliament’s job to decide.
Well, government intervention is actually really complicated and that’s why lots of bureaucrats learn from past failures and try to figure out how to do better.
What would be a big economic impact? And which measure would have such an impact?
For example, they plan to reduce taxes by 10 billion. Their example is “family of four with 60k income gets a reduction of 600 in 2028”.
Germany’s GDP is 4470 billion. These 10 billion do not make any significant difference on the grand scale.
On the personal scale, for this family of four, its +50€ per month or +12,50€ per person per month. Also not much of a difference.
Inflation makes a bigger difference than that by 2028. Also, here I just account for the tax aspect. This family will face increased costs to pay for pensions and stuff and it might well be a net negative for them. I’ll wait for some professionals, like the DIW, to calculate that.
Okay, so you cannot give an example of what would be big. You also don’t give an example of what policy would have a big impact. That’s not constructive.
600 euro per household is not big. Would 1200 euro be big?
The €500 billion special fund for military spending had a big impact. For example, mortgage interest rates immediately jumped by 0,5%.
You cannot fix the German economy by fiddling with income taxes a little. There is also lots of things the German government cannot do (e.g., ECB interests rates, Volkswagen business strategy).
I believe the biggest lever they have is to build residential areas to reduce housing costs. That shows up in the reform package but only in vague terms:
So they want to create some kind of association to build cheap housing. No timeline, no budget, no goals.
I fully agree with you. The housing market for low cost housing is failing and requires government intervention. Maybe the details of this measure will be published once the parliament works out the laws. Budget and timeline, sounds like that’s the parliament’s job to decide.
The previous government also tried to fix it and the one before as well. They all failed. So I don’t expect the Merz gang to achieve anything.
Well, government intervention is actually really complicated and that’s why lots of bureaucrats learn from past failures and try to figure out how to do better.