Fried - View from Berlin: The Chancellor and his solos - or why Christian Lindner will have little to laugh about

This time we are moving into the field of tax policy.

Fried - View from Berlin: The Chancellor and his solos - or why Christian Lindner will have little to laugh about

This time we are moving into the field of tax policy. But feel free to read on. It may be about your money. And it won't be as complicated as you think. At one point there is even something to laugh about. Perhaps.

So, the FDP wants to completely abolish the solidarity surcharge in order to support the economy and relieve the burden on service providers. Completely because since 2021 only top earners and companies that pay corporate tax will have to raise the solidarity. For everyone else, a federal government abolished solidarity, whose finance minister was Olaf Scholz.

There is a little story about this: After the FDP withdrew from the explorations for a Jamaica coalition, negotiations about a grand coalition took place again at the beginning of 2018. Scholz spoke to Angela Merkel about the economy and finance on behalf of the SPD. He was in a good negotiating position because Merkel needed the SPD. So he was able to take a stand on some of their demands. For example with solos.

Merkel wanted to completely abolish the solidarity surcharge, Scholz rejected this. High earners should continue to pay, he thought. Scholz negotiated “hard as nails,” a witness remembers. Scholz is said to have said that the Chancellor could twist and turn as she wanted, but he would not give in just so that the Union could make its wealthy clientele happy. Scholz was so unfriendly to the Chancellor that Merkel complained to other Social Democrats. A long-suffering comrade waved his hand and replied: "You should see him when he talks to us."

The Soli has been around for 33 years. The Union and FDP introduced it after reunification to raise money for economic development in the new states. (It has also been very important to say at this point for 33 years: the solos are not only paid by the Wessis, but also by the Ossis.)

Today, around six million German citizens are still subject to solidarity, as are around 500,000 corporations. The tax brings in around twelve billion euros and no longer just plugs holes in the roads on eastern highways, but also holes in the budget. The Federal Finance Court still decided in 2023 that the current regulation was legal, even if not for eternity.

Now, six years after Merkel's failure, Christian Lindner wants to talk to Scholz again about the solos. Have fun, that's all you can say. The Chancellor has made it clear that he actually has no desire to do that. The topic had already been excluded from the traffic light coalition negotiations.

If the Chancellor remains as stubborn towards his finance minister as he was with Merkel, Lindner would only have one hope: the Federal Constitutional Court. Since August 2020, back when the FDP was in opposition, there has been a constitutional complaint filed by the liberal parliamentary group against the Soli in Karlsruhe. It is unlikely that the court will agree with the plaintiffs. But that's what the coalition also thought when it made its judgment on the debt brake.

And here it comes: If Karlsruhe decides in favor of the FDP at some point, its Finance Minister Christian Lindner, of all people, would have to pay back income from the solidarity, in the worst case all the way back to 2020. That would be the next huge hole in the budget - one that could finally swallow up the coalition.

No, that wasn't actually the place to laugh.