Wednesday, April 24, 2019
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Taxes: Take off the solos for everyone!

Germany must discuss a fair distribution of tax payments. But please not in connection with the solidarity surcharge.

Comment by Simone Boehringer

It sometimes seems like a daisies game: I want it, I do not want it, I want to … Just that the last plucked leaflet does not decide for or against whether the solidarity contribution is abolished. But politicians. The special levy, which was reintroduced in 1991 and then after a short break in 1995 to cope with burdens from German reunification, has long been the subject of heated arguments in the Bundestag.

The Soli is also a vivid example of how politicians like to mix two goals immediately when it comes to money: the fundamental use of funds with the most equitable distribution possible. This often leads to complicated regulations, a lot of bureaucracy and annoyance in those who are concerned: the citizens. This must be done differently, especially with a supplementary levy such as the soli, which is charged differently than taxes earmarked.

The federal government has been doing well in taxation for years

One thing is certain: The Solidarity Pact II, which forms the basis for balancing economic imbalances between East and West Germany, expires in 2019. This eliminates the legal rule for solos. Of course, new laws for a levy can be decided to continue – there was talk of promoting innovation in structurally weak areas or even educational programs – but you can and should be in times of bubbling tax revenue also simply sovereign and decide, such projects from the normal tax revenue to stalk. The federal government has been doing well for tax purposes for years, and the task of contributing to the balance of living conditions between regions has not only been governed by German constitutional law since German reunification.

To abolish the solos until 2021 instead of the end of the Solidarity Pact, so be it, transitions take time in a democracy. But the small-to-small discussion about the fact that the solos should not fall for all, and the so-called better earners – on the earnings limit of 61 000 Euro a year can be in expensive metropolitan areas such as Hamburg or Munich arguing – except risks, and risks also distracts from the big questions of tax policy.

The fundamentally legitimate aspirations to tax better-off citizens more than others are in the debate on income and inheritance tax. A higher taxation of high earners just about a controversial special levy to operate, not only mixes different goals together, it can also lead to evasive reactions that are difficult to calculate.

Thus, for example, the so-called annual wage limit, from which dependent employees can insure themselves privately, will rise to more than 60,000 euros in 2019, so it is very close to the line for the abolition of the solidarity surcharge. By 2021, the limits are likely to be the same, as the health insurance limit rises annually. For example, those who intentionally seek earnings below the soli threshold risk their private health insurance (PKV). Or, if he, like many older workers and single parents, deliberately wants out of private health insurance, the soli limit may be reason less to work in the main job and rather by mini-job by the way.

Unclean and incalculable procedure

Now there are in Berlin certainly people's representatives who reform the health insurance system anyway, even want to abolish the PKV completely and therefore would have nothing against such a side effect of a half-baked soli-abolition. But a weakness of the system through the back door would be a messy and thus again incalculable approach.

A partial abolition of solos is also associated with a much higher bureaucratic effort than the total elimination. And job retention in administration is not among the primary goals of tax policy. Of course, it is a question of designing a clearly understandable tax and levy system for citizens.

More than a quarter of a century after its introduction, the solidarity surcharge has become the symbol of an almost arbitrary additional tax for many citizens, which has moved away from the former sign of solidarity in perception. It would therefore only be consistent to finally abolish this levy and then dedicate straight to the strategically important issues of income and inheritance tax or health insurance. Here the question of distribution and justice belongs, which is falsely discussed now in Soli.

End of the tax boom

Government revenues are significantly lower than expected. Finance Minister Scholz considers this a normalization: "The trees do not grow in the sky."

By Cerstin Gammelin




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