BERLIN (Reuters) - The German government can lower income tax rates before the next elections due in 2017 by eliminating "bracket creep" thanks to a projected increase in tax revenues from a new minimum wage, Economy Minister Sigmar Gabriel said on Sunday.
The anomaly of "bracket creep", or "cold progression" as it is also known in Germany, stems from the country's tax laws. Unlike major economies such as the United States, Britain and France, thresholds in Germany's progressive tax system are not automatically adjusted. This means that an individual's pay rise can trigger a net pay cut.
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