According to Reuters:

German Chancellor Olaf Scholz set out a 200 billion euro ($194 billion) "defensive shield", including a gas price brake and a cut in sales tax for the fuel, to protect companies and households from the impact of soaring energy prices.

Europe's biggest economy is trying to cope with surging gas and electricity costs caused largely by a collapse in Russian gas supplies to Europe, which Moscow has blamed on Western sanctions following its invasion of Ukraine in February.

I can understand subsidizing the costs for businesses and for the poorest households but why are middle and upper class consumers being subsidized as well? Have there been any discussions in the German parliament over this question?

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    Latest energy money is taxable, so people in a higher tax bracket get to keep less. The poorest get to keep it all. So we do have measures that take wealth into account, and some that don't.
    – Polygnome
    Sep 29, 2022 at 16:51
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    Your claim to understand this for 'businesses and for the poorest households' is a strong political statement. Note that elections are usually decided by voters and in practice that usually means middle class voters. Businesses do not vote. You could of course claim that it is in the best interest of a middle class voter that the subsidies go to businesses instead of directly to the voters but others will have different opinions on that.
    – quarague
    Sep 30, 2022 at 7:03
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    Comparable measures have been, or will be, enacted in the UK - specifically, a cap on the unit price for gas/electricity, and a one-off discount; and they are universal, presumably for the same reasons as in Germany. Sep 30, 2022 at 8:23
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    In other words, your question seems to be splitting hairs between (to use a different example) "Doctors take care of people" and asking why it doesn't explicitly state that "Doctors take care of people who are in need of medical care". Just because it wasn't explicitly stated doesn't mean that it wasn't already the case.
    – Flater
    Sep 30, 2022 at 8:32
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    @JohnBollinger if the country needs X cubic meters of gas but only has 0.8*X cubic meters available, there's no choice but to reduce consumption by 20%, no matter how politically unfeasible. Only question is who will end up reducing their consumption. Sep 30, 2022 at 18:55

7 Answers 7


If you subsided based on income or other factors that means you need additional overhead in order to determine who is eligible. In addition it does not prevent people who don't need the assistance from getting it as well as there cases you can have lower income but not need the assistance. Not to mention this doesn't account for people with higher income that also can't afford the increase in costs due to how they budgeted things. Just because you make more money doesn't mean you have a larger budget surplus.

On the other hand if you just provide the assistance to everyone you are able to remove the costs associated with determining who needs it and who doesn't.

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    There's also a matter of popular support; at least in the U.S. (sigh...) social support programs that only help the poor are perpetually being cut, having onerous regulations attached (poor people can't use food stamps or WIC funds to buy anything but this preapproved list of items and brands), etc. Programs that cover everyone (social security, Medicare) are broadly popular though. So you're not only not spending as much as you think (the benefits to those who don't need it being made up for by lower administrative costs), you get broader support for the policy in general. Sep 30, 2022 at 13:16
  • @ShadowRanger programs that benefit everyone are unsustainable given current birth rates. Social Security will be insolvent within a decade and European pension funds are already under extreme pressure. You do want programs that are targeted as narrowly as possible, anything else is kicking the can down the road. Sep 30, 2022 at 14:27
  • @JonathanReez: Social Security is already quite progressive; the taxes paid rise linearly with income (to a limit) while the benefits scale sub-linearly. And those with meaningful non-social security income pay taxes on their social security benefits (up to 85% of the benefits are taxable depending on income), while the poor don't. Social Security is really easy to fix (even without fixes, it could pay 70-80% of promised benefits, and slight tweaks to the income cap or the tax that funds it could make up the gap) without putting it on the chopping block by cutting off all benefits to the rich. Sep 30, 2022 at 14:34
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    Pensions are not inherently problematic, it's just that people refused to fund them at the level they actually needed (relying on overly optimistic actuarial assessments of future performance or not even pretending and just underfunding them intentionally). When the pensions are fully funded using reasonable models, they're fine (compare the original U.S. gov't pension of CSRS, that didn't fund itself properly and has a $700B deficit, to the replacement FERS that was funded properly and has been within $10B, plus or minus, of projected benefits since inception). Sep 30, 2022 at 14:39
  • @JonathanReez Social security isn't really relevant here but the major problems it has it that Congress keeps stealing from the funds to use it for other things and if left alone it would not be having any issues.
    – Joe W
    Sep 30, 2022 at 15:16

The policy is probably targeting also people substantially above the median of both income and equity, and on purpose. The subsidies are not only meant to prevent people from freezing or going hungry; they are meant to prevent social unrest. Discontent with the specific government is one thing, and every government naturally tries to keep people on their side; but what I see is growing discontent with the system, and that's considered a major threat to democracy itself. Remember the yellow vest riots in France a couple of years ago? The trigger were high gasoline prices but they evolved quickly into a general protest comprising several different factions, including systemic opposition. Any grievance currently falls on a fertile ground of general discontent and distrust.

Therefore, to prevent social unrest, the subsidies are designed to buffer high energy prices for a majority of the population, including relatively wealthy people.

One such group certainly are home owners who will be particularly hard-hit by skyrocketing energy prices because heating a single home is expensive compared to heating an apartment. Home owners in Germany are relatively more wealthy than their American counterparts because land, labor and building codes all make even simple single homes vastly more expensive than in America, which lifts probably the vast majority of owners over the median. At the same time, house owners are often on a tight overall budget because of the loans they had to take out.

Of course you could shrug and say these are luxury problems; they should simply sell their houses and move into a smaller apartment. Nobody is going to starve, after all. But you would sell into a market slump, and the subjective experience of having to move out of one's own house for reasons outside one's influence (but attributed to the government!) is devastating. You would have an exodus, potentially a collapsing housing market and construction industry, at a time when more housing is direly needed, and a very bad press.

Therefore, the only people for whom the subsidies would not be a stress relief are the fairly rich ones, a minority. That is simply accepted, for simplicity and uniformity of the implementation.

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    Do people owning apartments (Eigentumswohnung) spend more on heating than people renting apartments, or are you comparing house-owners against apartment-renters?
    – gerrit
    Sep 30, 2022 at 14:12
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    It blows my mind that a socialist state would be concerned with wealthy single family home owners having to tighten their belts… Sep 30, 2022 at 14:24
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    @JonathanReez The German coalition consists of SPD (social democrats), greens, and FDP ("free democratic party"). The FDP are economically small-government liberal, tend to favour lower taxes, less regulation, and their voter base is generally quite rich (often stereotyped as driving Porches at 250 km/h on the Autobahn). They would be the first to very strongly deny the idea that the current German government is socialist (and indeed, it isn't).
    – gerrit
    Sep 30, 2022 at 15:55
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    @JonathanReez It depends on the goals of the socialist state. If the point of "socialism" is to increase overall happiness, as opposed to be "fair" even if it makes people miserable, it would probably be better to avoid sudden disruptions that cause a lot of people to have to move, especially if the factors causing the disruption are only short-term problems. (Also please read the second-last paragraph of the answer.)
    – cjs
    Sep 30, 2022 at 18:56
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    @JonathanReez Consider if owning a home was important to someone, and they made sacrifices in other parts of their lifestyle to afford it, and now are looking at enormous energy prices to heat the house. They may not be any more wealthy than someone with a small apartment, and at the time they purchased the house, they may have had no reason to suspect that this may happen, yet here they are. Should the state leave these people to suffer while only subsidising those with smaller, cheaper to heat apartments, even if they are on the same income?
    – B-K
    Oct 1, 2022 at 6:53

Note that how this subsidy is going to work in detail is not yet decided. What the government did so far is:

  • state publicly that they want this to happen
  • set aside a budget (up to 200 billion euros) for it and a time frame (it is supposed to last until around April 2024, the end of the next winter)
  • proclaim what it is supposed to achieve

What is supposed to happen next is that some suitable expert commission will work out a detailed proposal how to achieve these goals. How to do that is currently actively discussed in the media. As there also should be motivation to save gas/ energy this is tricky to achieve. There are also vastly different opinions on who should benefit from this and by how much.

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    Not yet decided? I received my (taxed) energy money (€300 Energiepreispauschale) today.
    – gerrit
    Sep 30, 2022 at 14:09
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    @gerrit I did on Sep 14, this has nothing to do with price subsidiaries though. The money students are supposed to get was decided weeks ago and there still is no plan regarding how it is supposed to be allocated to them. Sep 30, 2022 at 15:53

Overhead costs and spite is the only thing it would give.

The overhead of deciding who is eligible to receive the subsidy is costly. This would be a clear negative.

Lets try to find the positives of just giving it to the poorer households. In other words what financial/economical benefit does it bring? Lets start by seeing where the money comes from. From the state, whom gets it mainly from taxes; but also, albeit in smaller amounts, by printing and devaluating current fiat assets and then some other stuff in even smaller amounts.

Lets look at the biggest piece of the pie, the taxes, and how these taxes are setup. They are set up progressively. Meaning that higher household (medium & high) incomes are paying the higher part of the tax-burden compared to the lower household incomes.

The majority of the amount of money that a lower household income receives through this subsidy is mainly paid by the higher household incomes; Likewise the majority of the money that the the higher household incomes receive through this subsidy are mainly paid by higher household incomes - themselves.

If the state now runs a deficit in their balance sheet, they will have to go where the money is - the higher household incomes and they will tax them some more, the lower household incomes would be left relatively unaffected or at least affected in a much lesser degree.

Isolating this process and looking at the cycle, each time this cycle would happen the poor are getting richer and the rich are getting poorer EVEN if the higher household incomes are not excluded from this subsidy.

To conclude, besides the extra overhead cost of trying to see who is eligible. The fact of being excluded would create a lot of spite, as it feels like another slap for the ones excluded - whom are already contributing more. As now they aren't 'only' paying more taxes, but are also excluded on benefits. It's two tangible negatives over one. Even though they would pay for the bulk of the cost in the long run anyhow and the result would be the same. Two tangible negatives are different feeling than one and creates a bigger negative psychological impact, and as such a bigger negative social impact.

I see you thinking, well the highest incomes avoid taxes. Trust me - this single or select few people don't care getting a few hundred or a few thousand in subsidies. This money is NOTHING to them, nor to the state; compared to the millions of euro the state is missing out on by the many tax loopholes they can use. And even with the loopholes in place, in many cases they still do pay a fair share of absolute taxes; much much more than the average person; much much more than what they will ever get in return from the state or this subsidy, so why make them feel excluded for something so trivial?

One last thing I want to add, what others stated; some medium income and high income households have indeed just no margin left.

Cheers, Andries

  • I beg to differ. The overall tax burden is regressive in low income brackets in Germany. Only from middle income brackets on it becomes progressive. Sep 30, 2022 at 18:34
  • "Contributing more" depends on how you measure it. For example, a different measure from the one you use would be income remaining after taxes. Say Alice has €2000 income and is taxed €500, and Bob has €3000 income and is taxed €1000. After taxes Alice has €1500 and Bob has €2000. Bob is obviously coming out with more money; should he feel upset that he can buy "only" 33% more things than Alice? (The answer to that will obviously vary depending on your values and how you feel about people poorer than you.)
    – cjs
    Sep 30, 2022 at 18:41
  • @cjs 'Contributing more' is indeed dependant on how one measures it. But this ethical question stands lose from my answer. From the context it should be clear that this is solely looking at tax contribution. Sep 30, 2022 at 20:19
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    @AndriesReyskens Absolutes are not at all the only thing that makes sense when looking at a profit figure. If someone told me I could walk to the nearest government office ten minutes away and fill out a form to receive €15 off my next electricity bill, I probably wouldn't bother because the marginal value of €15 isn't all that much to me. Someone else might be eager to do that because the marginal value of €15 is quite a lot more to them.
    – cjs
    Sep 30, 2022 at 23:16
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    @AndriesReyskens Rich people do not lose a second thought on ordering a 25€ sprinkling water bottle in a hotel because it is a marginal portion of their wealth and income. Things look different when your monthly budget for food and drinks is 150€ max. Same goes for policies: It is a huge difference whether your food and drink budget is essentially nullified by the rise of energy costs or you may lose a visit in a restaurant out of ten each month. The probable scenario is 150€ less in general economic consumption for poor people vs. bit more than that not transferred to the financial market. Oct 1, 2022 at 14:15

Because the government includes the liberal FDP.

The current (2022) German government coalition consists of three parties:

  • SPD, a social democrat party on the centre-left. Their platform includes the usual mildly left-wing ideas of European social democratic parties in the 21st century. Their voters come from all classes.
  • Greens party, a party with roots in the anti-war and anti-nuclear environmental movements of the 1970s/1980s, today a party favouring moderately strong government intervention to protect the environment, but also moderately on the left on welfare issues. Their voters tend to be higher educated and urbanised; not necessarily rich, but not much working class poor.
  • FDP, a small-government liberal party on the centre-right, with a focus on freedom, including lower taxes, liberal drugs, absence of speed limits, and general deregulation. Their voters tend to be relatively rich, with one stereotype being people who drive Porches at 250 km/h on the Autobahn.

For the FDP in particular, this is not their natural government coalition. They would prefer to be in coalition with the CDU (conservative party), but they are not. The differences between the parties show in debates on how to handle the energy crisis.

The notes of government meetings are not public, but I would fancy a guess that the answer to the question is: the payments are reduced for everybody because the FDP is in government. FDP voters are rarely poor, and by reducing the cost for everyone, FDP voters also get something.


In the accompanying press conference, the argument Robert Habeck, minister for economy, delivered was [German source] that the energy crisis was about to become an economic and social crisis as well.

This, together with the general thrust of past programmes and arguments that are hard to pin down in one post, leads us to conclude two goals that would not be served if only the poor were helped:

  1. A major goal is to help the economy. The competitional disadvantages that already existed due to the highest energy prices in all of Europe before the Russian invasion of Ukraine even started raised by the factor of 2-4. This threatened to hit the export-driven, energy-intensive industry of Germany very hard and in part already did (see e.g. here). Therefore, a main goal was to intervene so that the rising cost functions of the industry and following bankruptcies do not lead to extreme recession.
  2. It is hard to sell general subsidiaries for the economy without adding general subsidiaries for private households if you do not want to risk a social crisis. Especially considering high inflation rates there is a lot of volatile political atmosphere in the more politically active social groups which are definitely not to be found in the lowest income brackets. It is the middle class that goes on demonstrations and it is the upper class that finances political campaigns. Therefore, it makes total sense to include everyone if one wants to throw in tons of money for the economy anyways.

That being said, up to the moment I post this, there is nothing more than an expert committee being installed that is supposed to work out the details and a financial framework. We do not know how it will look like.


One point that hasn't been mentioned so far is that subsidising on the supply side, i.e. subsidising the local/regional energy suppliers when they buy gas (or electricity) is a possibility. That may be done with even lower burocratic overhead than a subsidy that is paid to people or businesses (even if that would not include checking whether they're sufficiently poor) since there are fewer such suppliers than inhabitants or businesses in general.

As others have said, it is not clear yet, which routes will be taken - but the current announcement leaves this possibility open to discussion.

Re burocracy of subsidizing only those in need: (which in general is an approach that I'd favor)

Right now, the sharp increase in energy costs puts a whole lot of households into the "needy bracket" that weren't considered in need of financial aid before.

Paying out more subsidies to those who already receive financial aid by the social security system is comparatively easy. But I doubt that social security administration would be able to manage such a sudden inflow of cases. (Plus, the respective burocracy is considered quite daunting to the ones applying for aid)

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