Berlin It is a proposal that has fueled a debate in the traffic light coalition that has been going on for months: In their annual report, the five economic experts insist on higher taxes for top earners. In order to “signal that the energy crisis must be dealt with in solidarity,” as the paper says, which is available to the Handelsblatt. It is to be officially handed over to the federal government on Wednesday afternoon and then presented.
Specifically, it talks about an “energy solidarity surcharge” for higher earners. Alternatively, the committee proposes a “strictly limited increase in the top tax rate” in order to finance part of the relief packages decided in times of the energy crisis in a socially just way.
These are unusual sounds for the body, which had reliably advocated tax cuts in recent years and with a different cast. But these are also unusual times, another top economist might object at this point: LBB chief economist Moritz Krämer.
The top economist at the largest German state bank had already advocated the introduction of a new, socially graded solidarity surcharge in April. “The turning point,” said the scientist, “doesn’t come for free.”
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The example shows: The current proposals of the five economic wise men are in a series of similar proposals for tax increases and solidarity contributions. Embedded in a discussion that has been tearing ever larger rifts in the federal government for months. An overview.
energy solos
In their annual report, the five economic wise men justify a temporarily higher top tax rate or an energy soli contribution for higher earners with the fact that the measures taken so far during the crisis “also benefited the higher income groups to a large extent”. This applies, for example, to the tank discount, as part of which the federal government levied a reduced energy tax on fuels from June to August 2022.
In order not to relieve the top five percent of society in the future, but above all those citizens who “spend a significantly higher proportion of their income on rent and groceries than households with higher incomes”, additional taxes for higher earners are necessary for a limited time – or just a income-related solidarity surcharge. According to the report, solos or tax increases should apply until spring 2024.
>> Also read the comment: The five wise men have gone astray in the tax debate
The FDP-led Federal Ministry of Finance said on Tuesday that higher taxes would not go together with the goal of maintaining Germany’s competitiveness. The SPD, on the other hand, met with approval.
transformation solos
Only last weekend – at the debate convention, the most important SPD event of the year – very similar tones could be heard from SPD circles.
In order to be able to “adequately finance the necessary political measures” in times of crisis, a one-time special levy for the wealthy is appropriate, according to the amended lead motion of the party executive. A so-called “transformation solo” is also a suitable instrument. What such a solidarity contribution could look like exactly, they want to “discuss and decide together in the coming months”.
In the case of the FDP, the new wording of the coalition partner met with little enthusiasm. The Hamburg state executive of the party, Gert Wöllmann, tweeted, along with a disillusioned smiley: “The solidarity surcharge, which was only introduced for one year, has still not been abolished after more than 30 years – also thanks to the SPD – the SPD wants to Introduce transformation soli’ to the next ‘soli’.”
wealth tax
A wealth tax has not been levied in Germany since 1997 due to a ruling by the Federal Constitutional Court. In its new leading motion, the SPD is now calling for the “reactivation of the wealth tax on multi-million and billion-dollar assets”.
The SPD also wants to relieve “small and normal incomes from income tax” and, in return, tax “extraordinarily high earned income” more fairly. “Germany has many strong shoulders – we need them now,” says the lead motion.
In the 2021 federal election campaign, the SPD had already advocated a wealth tax of one percent on very large assets. The Greens also campaigned for a wealth tax in their election program, demanding a one percent levy on wealth over two million euros.
In contrast, the election program of the FDP at the time said: “We Free Democrats want to permanently abolish the property tax.” Hardly anything damages Germany as much as “a debate about expropriations”.
The reaction of the FDP to the latest advances by the SPD was corresponding: “Instead of additionally burdening the middle class, which are already in need due to the high energy prices, with an additional wealth tax, we should rather strengthen our economy and enable investments,” said the deputy FDP Group leader Christoph Meyer on Monday to the Handelsblatt. Such “growth-reducing and performance-hostile measures” are “not to do with the FDP parliamentary group”.
“Zeitenwende” solos
“I advocate the reintroduction of the solidarity surcharge,” said LBB economist Moritz Kraemer in early April. The costs of the crisis “cannot be borne without a solidarity update,” said the head of the German tax union, Thomas Eigenthaler, at the time.
Kraemer’s specific suggestion: a solo with social differentiation. “That must then also be borne by those who have benefited from all the rising real estate values and shares,” explained the economist. And these are “not the average earners”.
load balancing
The term Burden Equalization goes back to the Burden Equalization Act passed in 1952, which was intended to compensate those who had emerged impoverished from World War II. At the time, the levy on substantial assets amounted to 50 percent of the amount of assets and could be spread over a period of up to 30 years. The annual load therefore remained low.
Danyal Bayaz (Greens), Finance Minister of Baden-Württemberg, introduced the term to the current debate. A crisis – especially “in times when people and companies are suffering from high inflation” – is not the right time for tax increases, Bayaz told the daily newspaper “Die Welt”. After the crisis, however, “strengthening the revenue side” must be discussed. His suggestion: “You could think about a kind of burden sharing that doesn’t touch the substance and stretches over many years.”
Economists like the Bonn economics professor Moritz Schularick had already called for such a burden sharing during the corona crisis. SPD chairwoman Saskia Esken also spoke out in favor of this at the beginning of the corona pandemic. Others, such as the economist Lars Feld, warned: “To talk about a wealth levy in this situation is insane.”
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