The solidarity surcharge (Solidaritätszuschlag) in Germany is colloquially referred to as Soli and is an additional tax on income tax and corporate tax.
Originally the Soli was introduced in 1991 for a limited period of time and to finance various extra expenses from the Gulf conflict and then in 1995 for an indefinite period to finance the costs of the German reunification.
And since the beginning the percentage for the Soli is proportional to income one's income.
There is currently a debate on a reform. Striking is on the one hand that there are only different proposals for an abolition. In addition the debate is missing that the Soli is effectively a tax for the rich and that the conditions in the new states are still not equal and that there are also structurally weak areas in the old states.
The Soli is only collected if the income tax is above 972 Euro per year or 81 Euro per month. And if married couples tax their income together then the Soli is collected if the income tax is above 1,944 euros per year or 162 euros per month. The Soli is then 5.5% of the income tax. The income tax and thus the Soli however takes individual living conditions such as the number of children into account and increases with income. [4]
In addition the unemployment rates in the old and the new states are different. In the old states the official unemployment rate in 2016 was 5.6%. In the new states however the official unemployment rate in 2016 was 8.5%. But these are only the official numbers that conceal many unemployed people for example if they are enrolled in trainings and courses. And it can be assumed that the real numbers correspond to the official numbers. [5,p.29] [6]
Beyond the new states weak regions have also emerged in the old states. These include the Ruhr area, Bremen, Saarland and parts of Schleswig-Holstein. Therefore there is still room for a wealth tax or redistribution from upper income groups to the lower and middle income groups. [5,p.35] [7,p.98] In addition the infrastructural development is endangered in much more regions of the old federal states such as in Parts of Schleswig-Holstein, Lower Saxony, Hesse, North Rhine-Westphalia as well as the Saarland and Rhineland-Palatinate. [7,p.104]
In September 2010 the Federal Constitutional Court (BVerfG/Bundesverfassungsgerichts) in Karlsruhe rejected the decision of the NFG. The Federal Constitutional Court has ruled that supplementary levys under the Basic Law do not have to be limited to a certain time frame. In addition the soli may be levied as supplementary levies on income tax and corporate tax without infringing on the equal treatment of people. [11] [12] In August 2013 the NFG submitted the Soli to the Federal Constitutional Court in Karlsruhe for a review. However the Federal Constitutional Court in Karlsruhe has not yet moved away from its own position. The Soli could therefore not be abolished by legal means. [13] [14] [15]
After a suggestion from the Federal Minister of Economics Peter Altmaier (CDU) the Soli should be completely abolished. After this the Soli should gradually phase in three steps untill 2026. The income limit for which no Soli is to pay is to be increased and the contribution to the Soli should be reduced accordingly. In order to compensate for the loss of revenue subsidies should be dropped and federal investments should be sold. [20] [21] [22] [23]
Striking is that the AfD is in favor of the abolition. According to the AfD the increased financial needs of the federal government due to the German reunification could no longer be proven and no other concrete purpose had replaced the original purpose. The AfD is also quite liberal in economic matters. And de AfD is particularly successful in the new states and thus the profits of the solidarity surcharge. In the debate about the solidarity surcharge one can certainly recognize the AfD's priorities. [24] [24,pdf] [25]
[1] In freundschaftlicher Verbundenheit - Deutschlands Beitrag zur Befreiung Kuwaits
http://www.kuwait.diplo.de/Vertretung/kuwait/de/03/Bilaterale__Beziehungen/seite__Befreiung__Kuwait.html
https://web.archive.org/web/20141208203539/http://www.kuwait.diplo.de/Vertretung/kuwait/de/03/Bilaterale__Beziehungen/seite__Befreiung__Kuwait.html
[2] Ergebnisse der Sondierungsgespräche von CDU, CSU und SPD - Finale Fassung 12.01.2018
https://www.tagesschau.de/inland/ergebnis-sondierungen-101.pdf
[3] Erste Ergebnisse - Darauf haben sich die GroKo-Sondierer verständigt 2018-01-12
https://www.spiegel.de/politik/deutschland/cdu-csu-spd-darauf-haben-sich-die-groko-sondierer-verstaendigt-a-1187445.html
[4] Solidaritätszuschlaggesetz 1995 (SolzG 1995) - § 4 Zuschlagsatz
https://www.gesetze-im-internet.de/solzg_1995/__4.html
[5] 25 Jahre Deutsche Einheit - Kinder, Autos, Religion - der Ost-West-Vergleich 2015-07-22
https://www.berlin-institut.org/publikationen/studien/so-geht-einheit.html
https://www.berlin-institut.org/fileadmin/user_upload/So_geht_Einheit/BI_SoGehtEinheit_final_online.pdf
[6] 27 JAHRE WIEDERVEREINIGUNG : Im Osten kaum Neues 2017-09-06
https://www.faz.net/aktuell/wirtschaft/deutsche-einheit-bleibende-unterschiede-zwischen-ost-und-west-15185868.html
[7] Die Zukunft der Regionen in Deutschland - Zwischen Vielfalt und Gleichwertigkeit 2019
https://www.iwkoeln.de/fileadmin/user_upload/Studien/Externe_Studien/2019/IW-Regionalstudie_2019.pdf
[8] Niedersächsisches Finanzgericht hält Solidaritätszuschlag für verfassungswidrig
https://finanzgericht.niedersachsen.de/startseite/aktuelles/fgaktuell/niedersaechsisches-finanzgericht-haelt-solidaritaetszuschlag-fuer-verfassungswidrig-121415.html
[9] FG Münster: Solidaritätszuschlag für das Jahr 2007 ist verfassungsgemäß 2009-12-08
https://www.kostenlose-urteile.de/FinG-Muenster_1-K-407708-E_FG-Muenster-Solidaritaetszuschlag-fuer-das-Jahr-2007-ist-verfassungsgemaess.news8907.htm
[10] Solidaritätszuschlag auch im Jahr 2007 noch verfassungsgemäß 2010-01-14
https://www.kostenlose-urteile.de/FinG-Koeln_13-K-128709_Solidaritaetszuschlag-auch-im-Jahr-2007-noch-verfassungsgemaess.news9445.htm
[11] Ungeliebter Zuschlag - Verfassungsrichter weisen Soli-Einspruch zurück 2010-09-23
https://www.spiegel.de/wirtschaft/soziales/ungeliebter-zuschlag-verfassungsrichter-weisen-soli-einspruch-zurueck-a-719089.html
[12] BVerfG, Beschluss der 1. Kammer des Zweiten Senats vom 08. September 2010
https://www.bundesverfassungsgericht.de/entscheidungen/lk20100908_2bvl000310.html
[13] Solidaritätszuschlag: Finanzgericht gewährt vorläufigen Rechtsschutz
https://finanzgericht.niedersachsen.de/startseite/aktuelles/fgaktuell/solidaritaetszuschlag-finanzgericht-gewaehrt-vorlaeufigen-rechtsschutz-137945.html
[14] Rechtsprechung - BVerfG - 2 BvL 6/14
https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=BVerfG&Datum=31.12.2222&Aktenzeichen=2%20BvL%206/14
[15] Solidaritätszuschlag - Finanzrichter halten „Soli“ für verfassungswidrig 2015-11-24
https://www.test.de/Solidaritaetszuschlag-Finanzrichter-halten-Soli-fuer-verfassungswidrig-4941606-0/
[16] ABSCHAFFUNG NUR FÜR 90 PROZENT : Ist ein bisschen Soli verfassungswidrig? 2019-08-11
https://www.faz.net/aktuell/wirtschaft/abschaffung-des-soli-fuer-90-prozent-die-spd-bleibt-hart-16328705.html
[17] Bundeshaushalt 2019
https://www.bundeshaushalt.de/fileadmin/de.bundeshaushalt/content_de/dokumente/2019/soll/Haushaltsgesetz_2019_Bundeshaushaltsplan_Gesamt.pdf
[18] Soli-Streit: Wirtschaft zerpflückt Scholz-Pläne 2019-08-16
https://haz.de/Nachrichten/Politik/Deutschland-Welt/Soli-Streit-Wirtschaft-zerpflueckt-Scholz-Plaene
[19] FINANZMINISTER SCHOLZ : Soli-Entscheid für Top-Verdiener erst in nächster Legislatur 2019-08-21
https://www.faz.net/aktuell/politik/inland/soli-entscheid-erst-in-naechster-legislatur-16344008.html
[20] GEGENENTWURF ZU SCHOLZ-PAPIER : Altmaier legt Papier zur kompletten Soli-Abschaffung vor 2019-08-15
https://www.faz.net/aktuell/politik/inland/altmaier-legt-papier-zur-kompletten-soli-abschaffung-vor-16335582.html
[21] "Abschmelzmodell" - Altmaier plant Soli-Abschaffung bis 2026 2019-08-15
https://www.spiegel.de/wirtschaft/soziales/solidaritaetszuschlag-altmaier-plant-abschaffung-bis-2026-a-1282160.html#ref=rss
[22] Scholz plant Teilabschaffung - Ist das Soli-Gesetz verfassungswidrig? 2019-08-15
http://www.tagesschau.de/inland/soli-verfassung-101.html
[23] Gegenentwurf zu Scholz-Plänen - Altmaier will Soli bis 2026 ganz abschaffen 2019-08-15
https://www.tagesspiegel.de/politik/gegenentwurf-zu-scholz-plaenen-altmaier-will-soli-bis-2026-ganz-abschaffen/24910258.html
[24] AfD will Solidaritätszuschlag abschaffen 2018-03-15
https://www.bundestag.de/dokumente/textarchiv/2018/kw11-de-soli-abschaffung-546440
http://dip21.bundestag.de/dip21/btd/19/011/1901179.pdf
[25] AfD fordert die Abschaffung des Solidaritätsbeitrag 2017-11-10
https://afdkompakt.de/2017/11/10/afd-fordert-die-abschaffung-des-solidaritaetsbeitrag/
There is currently a debate on a reform. Striking is on the one hand that there are only different proposals for an abolition. In addition the debate is missing that the Soli is effectively a tax for the rich and that the conditions in the new states are still not equal and that there are also structurally weak areas in the old states.
Introduction to the Solidarity Supplement
The Soli was introduced in 1991 for a limited period to finance various extra expenses from the Gulf conflict in 1991. Here Germany has contributed both with military and civil aid. [1] [1,archive] In 1993 and 1994 no solidarity surcharge was collected. And since 1995 the Soli has been introduced for an indefinite period to finance the costs of the German reunification. [2,p.15] [3]The Soli is only collected if the income tax is above 972 Euro per year or 81 Euro per month. And if married couples tax their income together then the Soli is collected if the income tax is above 1,944 euros per year or 162 euros per month. The Soli is then 5.5% of the income tax. The income tax and thus the Soli however takes individual living conditions such as the number of children into account and increases with income. [4]
An Economic Evaluation
The tax income from the Soli should ensure that the living conditions in the new states with 16 million people become equal to the living conditions in the old states with 67 million people. Nevertheless there are still significant differences between the old and the new states. In 1991 the gross domestic product (GDP) per inhabitant and year in the old states was 22,687 Euros and in the new states 9,701 Euros or 43%. And in 2015, the gross domestic product (GDP) per capita and year in the old states was 39,187 Euros and in the new states at 28,702 Euros or 73%. [6] In the old states persons with a net worth of at least 240,000 Euros are among the richest 10%. And in the new states people with net worth of 110,000 Euros are already among the richest 10%. So if one compares these numbers one you can see that the new states have partially but not completely caught up. [5,p.35]In addition the unemployment rates in the old and the new states are different. In the old states the official unemployment rate in 2016 was 5.6%. In the new states however the official unemployment rate in 2016 was 8.5%. But these are only the official numbers that conceal many unemployed people for example if they are enrolled in trainings and courses. And it can be assumed that the real numbers correspond to the official numbers. [5,p.29] [6]
Beyond the new states weak regions have also emerged in the old states. These include the Ruhr area, Bremen, Saarland and parts of Schleswig-Holstein. Therefore there is still room for a wealth tax or redistribution from upper income groups to the lower and middle income groups. [5,p.35] [7,p.98] In addition the infrastructural development is endangered in much more regions of the old federal states such as in Parts of Schleswig-Holstein, Lower Saxony, Hesse, North Rhine-Westphalia as well as the Saarland and Rhineland-Palatinate. [7,p.104]
A Legal Evaluation
Whether the Soli is compatible with the German Basic Law (de facto constitution) is questioned again and again. The 7th Senate of the Financial Court of Lower Saxony (NFG/Niedersächsisches Finanzgericht) has negotiated in 2009 whether the Soli is compatible with the German Basic Law. According to the NFG the Soli violates the principle that before the law all people should be treated equally. The reason given by the NFG is that foreign and domestic incomes are not completely covered by the soli due to different tax regulations and that the financing of German reunification a long-term financial need can not be covered by levying a supplementary levy. However the NFG has decided that the proceedings be suspended and that a decision of the Federal Constitutional Court (BVerfG/Bundesverfassungsgerichts) is to be obtained. [8] According to the financial courts of Münster and Cologne however the Soli is constitutional. [9] [10]In September 2010 the Federal Constitutional Court (BVerfG/Bundesverfassungsgerichts) in Karlsruhe rejected the decision of the NFG. The Federal Constitutional Court has ruled that supplementary levys under the Basic Law do not have to be limited to a certain time frame. In addition the soli may be levied as supplementary levies on income tax and corporate tax without infringing on the equal treatment of people. [11] [12] In August 2013 the NFG submitted the Soli to the Federal Constitutional Court in Karlsruhe for a review. However the Federal Constitutional Court in Karlsruhe has not yet moved away from its own position. The Soli could therefore not be abolished by legal means. [13] [14] [15]
The Abolition
Whether and how the Soli should be abolished is debatted by the grand coalition of SPD and CDU/CSU since the creation of the latter. According to a proposal by the Federal Finance Minister Olaf Scholz (SPD) the Soli should be eliminated for lower and middle income groups. [16] And according to the Federal Ministry of Finance a complete abolition of the Soli would cost about 13 billion Euros. [17,p.2855] After the proposal of Scholz (SPD) was met with criticism criticism from various employers' associations however he withdrew his proposal. Now Scholz (SPD) does not want to decide over the Soli in this legislative period anymore. [18] [19]After a suggestion from the Federal Minister of Economics Peter Altmaier (CDU) the Soli should be completely abolished. After this the Soli should gradually phase in three steps untill 2026. The income limit for which no Soli is to pay is to be increased and the contribution to the Soli should be reduced accordingly. In order to compensate for the loss of revenue subsidies should be dropped and federal investments should be sold. [20] [21] [22] [23]
Striking is that the AfD is in favor of the abolition. According to the AfD the increased financial needs of the federal government due to the German reunification could no longer be proven and no other concrete purpose had replaced the original purpose. The AfD is also quite liberal in economic matters. And de AfD is particularly successful in the new states and thus the profits of the solidarity surcharge. In the debate about the solidarity surcharge one can certainly recognize the AfD's priorities. [24] [24,pdf] [25]
[1] In freundschaftlicher Verbundenheit - Deutschlands Beitrag zur Befreiung Kuwaits
http://www.kuwait.diplo.de/Vertretung/kuwait/de/03/Bilaterale__Beziehungen/seite__Befreiung__Kuwait.html
https://web.archive.org/web/20141208203539/http://www.kuwait.diplo.de/Vertretung/kuwait/de/03/Bilaterale__Beziehungen/seite__Befreiung__Kuwait.html
[2] Ergebnisse der Sondierungsgespräche von CDU, CSU und SPD - Finale Fassung 12.01.2018
https://www.tagesschau.de/inland/ergebnis-sondierungen-101.pdf
[3] Erste Ergebnisse - Darauf haben sich die GroKo-Sondierer verständigt 2018-01-12
https://www.spiegel.de/politik/deutschland/cdu-csu-spd-darauf-haben-sich-die-groko-sondierer-verstaendigt-a-1187445.html
[4] Solidaritätszuschlaggesetz 1995 (SolzG 1995) - § 4 Zuschlagsatz
https://www.gesetze-im-internet.de/solzg_1995/__4.html
[5] 25 Jahre Deutsche Einheit - Kinder, Autos, Religion - der Ost-West-Vergleich 2015-07-22
https://www.berlin-institut.org/publikationen/studien/so-geht-einheit.html
https://www.berlin-institut.org/fileadmin/user_upload/So_geht_Einheit/BI_SoGehtEinheit_final_online.pdf
[6] 27 JAHRE WIEDERVEREINIGUNG : Im Osten kaum Neues 2017-09-06
https://www.faz.net/aktuell/wirtschaft/deutsche-einheit-bleibende-unterschiede-zwischen-ost-und-west-15185868.html
[7] Die Zukunft der Regionen in Deutschland - Zwischen Vielfalt und Gleichwertigkeit 2019
https://www.iwkoeln.de/fileadmin/user_upload/Studien/Externe_Studien/2019/IW-Regionalstudie_2019.pdf
[8] Niedersächsisches Finanzgericht hält Solidaritätszuschlag für verfassungswidrig
https://finanzgericht.niedersachsen.de/startseite/aktuelles/fgaktuell/niedersaechsisches-finanzgericht-haelt-solidaritaetszuschlag-fuer-verfassungswidrig-121415.html
[9] FG Münster: Solidaritätszuschlag für das Jahr 2007 ist verfassungsgemäß 2009-12-08
https://www.kostenlose-urteile.de/FinG-Muenster_1-K-407708-E_FG-Muenster-Solidaritaetszuschlag-fuer-das-Jahr-2007-ist-verfassungsgemaess.news8907.htm
[10] Solidaritätszuschlag auch im Jahr 2007 noch verfassungsgemäß 2010-01-14
https://www.kostenlose-urteile.de/FinG-Koeln_13-K-128709_Solidaritaetszuschlag-auch-im-Jahr-2007-noch-verfassungsgemaess.news9445.htm
[11] Ungeliebter Zuschlag - Verfassungsrichter weisen Soli-Einspruch zurück 2010-09-23
https://www.spiegel.de/wirtschaft/soziales/ungeliebter-zuschlag-verfassungsrichter-weisen-soli-einspruch-zurueck-a-719089.html
[12] BVerfG, Beschluss der 1. Kammer des Zweiten Senats vom 08. September 2010
https://www.bundesverfassungsgericht.de/entscheidungen/lk20100908_2bvl000310.html
[13] Solidaritätszuschlag: Finanzgericht gewährt vorläufigen Rechtsschutz
https://finanzgericht.niedersachsen.de/startseite/aktuelles/fgaktuell/solidaritaetszuschlag-finanzgericht-gewaehrt-vorlaeufigen-rechtsschutz-137945.html
[14] Rechtsprechung - BVerfG - 2 BvL 6/14
https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=BVerfG&Datum=31.12.2222&Aktenzeichen=2%20BvL%206/14
[15] Solidaritätszuschlag - Finanzrichter halten „Soli“ für verfassungswidrig 2015-11-24
https://www.test.de/Solidaritaetszuschlag-Finanzrichter-halten-Soli-fuer-verfassungswidrig-4941606-0/
[16] ABSCHAFFUNG NUR FÜR 90 PROZENT : Ist ein bisschen Soli verfassungswidrig? 2019-08-11
https://www.faz.net/aktuell/wirtschaft/abschaffung-des-soli-fuer-90-prozent-die-spd-bleibt-hart-16328705.html
[17] Bundeshaushalt 2019
https://www.bundeshaushalt.de/fileadmin/de.bundeshaushalt/content_de/dokumente/2019/soll/Haushaltsgesetz_2019_Bundeshaushaltsplan_Gesamt.pdf
[18] Soli-Streit: Wirtschaft zerpflückt Scholz-Pläne 2019-08-16
https://haz.de/Nachrichten/Politik/Deutschland-Welt/Soli-Streit-Wirtschaft-zerpflueckt-Scholz-Plaene
[19] FINANZMINISTER SCHOLZ : Soli-Entscheid für Top-Verdiener erst in nächster Legislatur 2019-08-21
https://www.faz.net/aktuell/politik/inland/soli-entscheid-erst-in-naechster-legislatur-16344008.html
[20] GEGENENTWURF ZU SCHOLZ-PAPIER : Altmaier legt Papier zur kompletten Soli-Abschaffung vor 2019-08-15
https://www.faz.net/aktuell/politik/inland/altmaier-legt-papier-zur-kompletten-soli-abschaffung-vor-16335582.html
[21] "Abschmelzmodell" - Altmaier plant Soli-Abschaffung bis 2026 2019-08-15
https://www.spiegel.de/wirtschaft/soziales/solidaritaetszuschlag-altmaier-plant-abschaffung-bis-2026-a-1282160.html#ref=rss
[22] Scholz plant Teilabschaffung - Ist das Soli-Gesetz verfassungswidrig? 2019-08-15
http://www.tagesschau.de/inland/soli-verfassung-101.html
[23] Gegenentwurf zu Scholz-Plänen - Altmaier will Soli bis 2026 ganz abschaffen 2019-08-15
https://www.tagesspiegel.de/politik/gegenentwurf-zu-scholz-plaenen-altmaier-will-soli-bis-2026-ganz-abschaffen/24910258.html
[24] AfD will Solidaritätszuschlag abschaffen 2018-03-15
https://www.bundestag.de/dokumente/textarchiv/2018/kw11-de-soli-abschaffung-546440
http://dip21.bundestag.de/dip21/btd/19/011/1901179.pdf
[25] AfD fordert die Abschaffung des Solidaritätsbeitrag 2017-11-10
https://afdkompakt.de/2017/11/10/afd-fordert-die-abschaffung-des-solidaritaetsbeitrag/
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