According to experts, companies in Germany could save almost 65 billion euros by abolishing the solidarity surcharge. This emerges from a calculation by the employer-related Institute of the German Economy (IW). “Relinquishing solidarity would finally relieve some of the burden on companies and give them much-needed scope for new investments,” said economist Tobias Hentze. The tax must be abolished, the step is overdue.

On Tuesday, the Federal Constitutional Court will consider the question of whether the solidarity surcharge is still legal. The decision, which is not expected for a few months, could also have a major impact on the federal budget. For the coming year, the federal government has firmly budgeted for solidarity income of 12.75 billion euros.

If the judges overturn the levy, it would create an additional hole in the budget. The court could also decide that the state would have to pay back income from the solidarity surcharge from previous years. That would be around 65 billion euros since 2020.

Solidarity income between 2020 and 2028 at 122 billion euros

According to the IW, around six million people recently paid the solidarity and around 600,000 corporations. According to Hentze, the federal government’s income from this will be around 122 billion euros between 2020 and 2028. More than half of this comes from companies. The current economic situation is reason enough to question the solidarity, said the expert. “The economy is weakening, the economy is stagnating, and there is a threat of zero rounds or even layoffs in many industries.”

According to the complainants at the Federal Constitutional Court, it is unconstitutional to continue to raise solidarity since the so-called Solidarity Pact II expired in 2019. At that time, the grand coalition decided that only high earners – the top ten percent of incomes – would have to pay the surcharge.