Millions of taxpayers continue to pay the solidarity surcharge, although its existence ceased to exist at the end of 2019. Has the unloved levy become unconstitutional? A new case for the Federal Constitutional Court is in sight.

The Federal Constitutional Court may have to decide on an end to the solidarity surcharge. On January 30, the Federal Fiscal Court in Munich intends to announce the decision as to whether a lawsuit against the levy, which is now only paid by higher earners, will be submitted to the highest German court in Karlsruhe. This is what BFH President Hans-Josef Thesling said at the end of the oral hearing. A tendency left the IX. Senate, however, do not recognize.

The plaintiffs are spouses from Aschaffenburg in Lower Franconia who, with the support of the taxpayers’ association, want to bring down the unpopular surcharge. They argue that the solidarity compensation is now unconstitutional in two respects.

On the one hand, the original purpose has been dropped: the levy was used to finance Solidarity Pact II, which expired at the end of 2019 and was intended to finance the development of infrastructure in East Germany.

The plaintiffs are obviously less concerned with the money than with the principle: they lost in the first instance before the Nuremberg Finance Court, but the Aschaffenburg tax office reduced the advance payment for the solidarity surcharge to EUR 19 per quarter. From a legal point of view, the solidarity surcharge is not an ordinary tax, but a “supplementary tax”, as explained by tax lawyer Roman Seer, representing the two plaintiffs.

Supplementary levies are “purpose taxes” – if the purpose no longer applies, the associated levy would also have to be omitted, argued the head of the Institute for Tax Law at the University of Bochum. Other tax lawyers have also taken this view in recent years. There has been no special funding for the new federal states since the end of 2019, said Seer. “The federal and state governments agreed that there should be no Solidarity Pact III.”

On the other hand, the plaintiffs and their lawyers accuse the federal government of violating the principle of equality in the Basic Law, because only a small minority of taxpayers have to pay the tax, but not the large majority.

In the 2019 law on the return of the solidarity compensation, the coalition at the time decided that only higher earners – the top ten percent of incomes – would have to pay the surcharge. The remaining ninety percent of taxpayers should remain exempt. According to Seers, around 2.5 million people are still paying the solidarity surcharge. “It’s really an additional income tax,” said the law professor.

The taxpayers’ association accused the traffic light coalition of having completely misappropriated the solidarity surcharge: “The solidarity surcharge has now become a tax on the wealthy through the back door,” said President Reiner Holznagel after the hearing.

In the meantime, the position of the Federal Ministry of Finance has also changed. The then Federal Minister of Finance and current Federal Chancellor Olaf Scholz was in charge of maintaining the solidarity surcharge until autumn 2021. The Ministry of Finance joined the legal dispute during Scholz’s tenure as Minister. This means that the ministry initially wanted to dismiss the lawsuit as unfounded.

However, under the current department head Christian Lindner, the Ministry of Finance has withdrawn its involvement in the process, as BFH President Thesling said. From this it can be seen that Lindner would have nothing against the solidarity surcharge finally being overturned by a supreme court. Whether Lindner agreed this with Scholz or changed the line that applied under his predecessor on his own initiative played no role in the negotiation.

the ninth The BFH Senate has obviously already formed an opinion, but has not indicated in any way what its decision might be. Contrary to what is customary in oral hearings, the judges asked neither the plaintiffs nor the defendant tax office in Aschaffenburg a single question.