Merz calls for the end of the solidarity surcharge: a plan with consequences!

Merz calls for the end of the solidarity surcharge: a plan with consequences!

Friedrich Merz, the chairman of the CDU, has expressed his intention to abolish the solidarity surcharge (Soli) by 2029 at an event in front of family entrepreneurs in Berlin. This claim contradicts the current coalition agreement with the SPD, which provides for maintaining the Soli for the reign. The Soli was originally introduced in 1991 as a temporary surcharge to finance the costs of reunification and was indefinitely included in the German Tax Act in 1995. The current sentence is 5.5 percent after it was only reduced by 7.5 percent in 1998.

Currently only better earning, companies and investors are affected by the solos, while for around 90% of the taxpayers the levy has been eliminated due to an increased exemption. Experts estimate that a complete abolition of the solos could cost the federal government 13 billion euros annually, which could have potentially negative effects on education and infrastructure. At the same time, companies could save around 13 billion euros annually from this measure.

political reactions and perspectives

The political reaction to Merz 'proposal is mixed. While the Union urgently demands tax relief for companies and the "working center", the SPD welcomes the judgment of the Federal Constitutional Court, which has rejected a constitutional complaint against the solos. Finance Minister Jörg Kukies (SPD) emphasizes that this judgment will create clarity for the federal budget. Critics of solo abolition, such as Julia Jirmann from the tax justice network, argue that the solos increase the distance between the tax burden between top earners and low earners.

The debate is also enriched by statements by the DIW tax expert, who suggests abolishing the Soli, but in conjunction with an increase in the tax rate for top earners, to ensure a fairer load distribution. In particular in the circles of the economy, the abolition of the solidarity surcharge is required because it is no longer justified.

Financial aspects of the solidarity surcharge

The solidarity surcharge, which is designed as a supplementary tax on income tax and corporation tax, is still levied on income tax, capital gains tax and corporation tax. Forecasts for 2025 show that the income from the solos could be around 12.5 billion euros. A large part of these income, about 91%, is borne by the richest 5% of the taxpayers. A further increase in the exemption limit to 19,950 euros and an expansion of the mitigation zone is planned for 2025.

Although the Soli has been considered a major source of income since its introduction in 1991, there is increasingly doubts about its necessity, especially after the Solidar Pact II has expired in 2019. The traffic light coalition is still obliged to find a uniform line on this question, while Friedrich Merz and parts of the Union continue to plead for abolition. The political landscape remains polarized, and the dispute over the solidarity surcharge will continue to remain a controversial topic in the future.

For more information on this topic, see the analyzes of , ndr and Tax advisors scout .