Who would benefit from the end of the solo end

BGH in Karlsruhe

On Monday, the judges will decide on the solidarity surcharge.

(Photo: dpa)

Berlin Christian Lindner and the Liberals started the federal elections with the demand to abolish the solidarity surcharge for everyone. But in the coalition negotiations, they could not push through.

Now the FDP boss is hoping for a second chance: In a test case, a couple from Bavaria is having the taxpayers’ association check whether the solos are still constitutional. The couple had sued because they believed that the basis of the solidarity surcharge was no longer applicable when Solidarity Pact II expired at the end of 2019.

In the first instance, the Nuremberg Finance Court did not follow the view, and the couple appealed. The oral hearing will take place on Tuesday before the Federal Fiscal Court in Munich, the highest court in tax matters.

Finance Minister Lindner has decided that his department should not take part in the process. Contrary to what was planned by his predecessor, today’s Chancellor Olaf Scholz (SPD), no representative of the Federal Ministry of Finance will defend the current solidarity ordinance. Does that make abolition more likely?

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At least Lindner’s decision in the traffic light coalition creates a bad atmosphere. Social Democrats and Greens are determined to keep the current rule, according to which the ten percent with the highest incomes must continue to pay at least part of the soli.

SPD is surprised at Lindner’s about-face

The SPD’s financial policy spokesman, Michael Schrodi, considers it “quite unusual that the finance minister does not defend the law”. Abolishing the solis would mean a relief for the highest income earners, while Lindner would also encourage other ministries to save. Finance Minister Lindner is stepping down behind party leader Lindner. “Not good,” comments Schrodi.

FDP leader Christian Lindner

The Minister of Finance does not want to have the Soli regulation defended before the Federal Fiscal Court.

(Photo: dpa)

Lindner, on the other hand, considers the complete deletion of the solo to be overdue. Last year in the traffic light coalition, he pushed through that the income limits above which the solos are due are raised because of inflation. This should at least ensure that only ten percent continue to pay the solos in whole or in part. Without adjusting the limits, more and more taxpayers would have to pay the levy due to increases in income.

The soli is a surcharge of 5.5 percent on the income tax payable. Anyone who has to pay more than 17,543 euros in income tax in 2023 must continue to pay at least part of the solidarity surcharge. However, it is not immediately due in full, there is a so-called mitigation zone.

The economist Frank Hechtner has calculated for the Handelsblatt what the new limits mean for the taxpayer. According to this, a single person does not have to pay any solos up to a monthly gross income of 6670 euros. He is then partially due. From an income of 9720 euros, the solos must be paid in full. For married couples with two children, the limits increase significantly. If only one partner is employed, the Soli is only due from a monthly gross income of 19,700 euros.


Accordingly, it is also clear who would benefit from an abolition: those with higher incomes. A single person with an income of 8,500 euros would be relieved of 1,064 euros per year. With a peak income of 15,000 euros, the sum is 3259 euros.

>> Read also: Up to 2200 euros more – This is how singles and families benefit from the relief in 2023

With reference to these relief effects for the rich, the SPD and the Greens reject changes to the soli. The FDP, on the other hand, emphasizes that the soli was originally introduced as a temporary special tax and has long since lost its legitimacy.

“The abolition of the so-called solidarity surcharge would improve our country’s competitiveness quickly and effectively,” said Finance Minister Lindner recently. Because in addition to people with very high incomes, companies in particular must continue to pay the solos.

>> Read also: Who has to pay tax on the savings from the relief

The revenue from the remaining solos is currently around twelve billion euros. According to a study by the employer-related Institute of the German Economy (IW), two-thirds of this sum is paid by companies. For example, 500,000 companies have to continue paying the solidarity surcharge on corporate income tax. Above all, however, many entrepreneurs who pay income tax as a partnership are above the exemption limit for the solos.

The solos will also continue to be levied on capital gains tax, i.e. on interest income and dividends. As a result, employees, pensioners or the self-employed can continue to be affected by the solidarity surcharge even despite low wage income if they have corresponding capital income. However, comparatively few taxpayers are affected here.

More: Energy solos and cold progression – The coalition squabbles over taxes on the rich

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