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Almost all taxpayers will no longer have to pay the solidarity surcharge in 2021. That brings a lot more money in their wallets. Critics are demanding complete abolition, also in court.
By Stephan Lenhardt, SWR
For 90 percent of today’s payers, so-called solos will be eliminated completely with the new year, for another 6.5 percent, at least partially, depending on income. Only the top earners have to continue to pay in full. The soli surcharge is currently 5.5 percent of corporate or income tax. So it is a tax on the tax.
“The abolition of the solidarity surcharge, along with the tax cuts we have now initiated for families, is the biggest tax break in a long, long time,” says Federal Finance Minister Olaf Scholz (SPD). According to the ministry, citizens will save around ten billion euros in total thanks to the reduction. Scholz: “In the midst of the corona pandemic, small and medium income will have more money.”
Intended for east construction
The Soli was introduced in 1991, initially for a limited period, to cover the costs of rebuilding the East after reunification. Since 1995 it has an unlimited validity. Solos flow only to the federal government and, like any tax, are not allocated. “Since 1995, the federal government has earned around € 110 billion more from Soli than it has spent promoting East German federal states as part of the Solidarity Pact,” according to a study by the Institut der Deutschen Wirtschaft (IW) .
High income married benefit
According to IW, a single person pays more than 1000 euros less in personal income tax, solidarity surcharge and social contributions in the new year than in 2020, depending on their income, a family with two children saves a maximum of 2500 euros. The effect of the reduction in solidarity is so strong that tax relief for various income groups will be higher in 2021 than in the entire period from 2017 to 2020.
Calculations carried out by IT service provider Datev on behalf of the “Süddeutsche Zeitung” program: Employees of the medium and high salary classes are especially relieved, especially those married with high incomes. Those who earn very little, however, hardly benefit, because today they only pay a few alone.
Businesses keep paying
According to the IW study, around six million people will continue to pay alone. In addition, there are more than 500,000 corporations. Even Marco Wanderwitz criticizes that. As the representative of the new federal states in the federal government, he is practically responsible for the reconstruction of the east. “The CDU will continue to work to abolish solos for the remaining payers, especially as many businesses are still affected,” he says. ARD-Investigation.
According to the IW study, a complete phase out of Solis by 2030 would mean an increase in gross domestic product of 86 billion euros. And in the next year alone, an additional 19,000 jobs could be created. The Taxpayers Association (BdSt) criticizes: “Politicians should have completely abolished the solidarity surcharge, retroactively to January 2020 and for all,” says President Reiner Holznagel. “So a normal wage earner would have had around 50 euros more a month to spend in 2020.”
Legally controversial
Solos are also legally controversial. The Taxpayers Association supports two model lawsuits. One is that of a senior Osnabrück executive from 2008. After a long legal dispute, the Lower Saxony Finance Court re-submitted it to the Federal Constitutional Court in January 2014, where the case is still pending according to the taxpayers association . The second lawsuit against solos by a Bavarian married couple this year now concerns the Bundesfinanzhof, the highest German tax court.
The FDP also filed a complaint with the Federal Constitutional Court against the continuation of the solos in September. “It was introduced as a supplementary tax for a very special purpose, namely to finance the charges of German unity,” said FDP deputy Christian Dürr. However, on December 31, 2019, the Solidarity Pact II expired with the aid for East Germany. A study by the Bundestag Scientific Service in 2019 concluded: “After all this, there is a very high risk that the Federal Constitutional Court will declare a solidarity surcharge unconstitutional for evaluation periods from 2020.”
Debate in Corona-Soli
The president of the SPD, Norbert Walter-Borjans, on the other hand, defends the partial continuation of the solos, especially in the Crown crisis: “There are good reasons to keep these remaining solos as part of the solidarity financing of the corona charges”, he told the “Rheinische”. Post office. “The SPD-led federal states had already submitted a first draft of a single tax to finance health care costs by the federal-state summit in November. There was criticism from economists and the coalition partner. : “I don’t believe in a new solidarity surcharge,” said Chancellor Helge Braun, for example, but the question of who is paying the cost of the crisis and how it is done has yet to be answered.
