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Soli Reform – Maybe a win for you?

Hello together,

I probably don’t make myself popular with this post in the financial blogger scene, but it’s enough for me.

The “Soli” will be abolished for more than 90% of the numbers so far. Point.

While Olaf Scholz has built absolute crap on the financial transaction tax, this is a reason to rejoice.

Yes, I know that the few percent who continue to pay him will handle a large part of the solo revenue. Goofy.

Yes, I know that capital gains, corporation tax and perhaps other types of tax will continue to be assessed. Goofy.


Taxes are not earmarked – The myth of building East

A big mistake is that the solo is used for the construction of the East. Not true and that is not the case with any tax.

The tax revenue goes into a big pot. Whether this finances the A 30, the A 71 or the window cleaning of the Reichstag is completely irrelevant.

Expenditure on the support of the new Länder, on the other hand, is bindingly regulated in the Solidarity Pact and is now only €2 billion for 2018.

This is countered by revenues from the solidarity surcharge of €17.5 billion.

In fact, €15.5 billion a year is now being used for other federal spending from the solidarity surcharge. And rising. Incidentally, €156.7 billion in expenditure swells to €210 billion in revenue over the entire duration of the Solidarity Pact.

This allows gifts such as parental allowance or maternal pension to be financed without a means test. Or you spend them pointlessly, as the purchase of laptops for the Bundeswehr proves.

Unfortunately, politics serves this enemy image soli wonderfully, of course, because Olaf Scholz finds such great words as: “The far-reaching reduction is also a sign of the success of the growing together in Germany”.

The break-even point at which expenditure on the Solidarity Pact and revenue from the Solidarity Surcharge had already been reached was almost the same in 2011. 8 years ago !


A win-win situation for society

Now that we have cleared up the myth of the use of solos, let’s look at the likely impact of the passed law:

  • 90% of people have more money in their pockets.
  • the soli revenue is roughly halved (to €10 billion).

As a result, €8 billion from the remaining soli revenue minus the Solidarity Pact will remain in spending that goes into the federal budget.

For society as a whole, this is a win-win situation.

Stock savers are, of course, pissed off because they still have to pay the soli on capital gains. But Olaf Scholz doesn’t care about that anyway.

But here, too, the burden is in many cases lower.


Example invoices seen for the year

Positive

      Single:

  • A single with a gross income of 31,200 euros would have about 200€ more net.
  • A single with a gross income of 60,000 euros would have about 400€ more net.
  • A single with €30,000 in capital gains and €60,000 income continues to pay €400 soli and still has €400 more.

      Married:

  • Married couples with a gross income of 120,000 euros would have almost 1000 euros more net.
  • Married couples with €30,000 in capital gains and €120,000 in income continue to pay €400 and still have €1,000 more.
  • Married couples with €80,000 in capital gains and €120,000 in income continue to pay €1,000 and still have €1,000 more.

Neutral

  • A financially free person with €60,000 in capital gains continues to pay €14800 withholding tax and €814 in soli.
  • A financially free married couple with €120,000 in capital gains will continue to pay €29600 withholding tax and €1630 in soli.

Negative

  • There is no example where someone is worse off.

There were compensations for the 5% who did not benefit

As a reminder: from 74000€ taxable gross wage (minus anything that can be claimed e.g. commuter flat rate) begins the progressive solo. Here are just a few points that have relieved this income group over the past decade:

Directly:

  • Only recently, the parental maintenance ceiling has been raised to €100,000. Cost point approx. €1 billion
  • Lowering the top tax rate to 42% in 1998-2005, of which the middle class had in absolute terms much less and which came later for them.
  • Reduction of corporation tax to 15%
  • The introduction of the withholding tax (instead of up to 42% in some cases, only 25% of capital gains taxes were incurred)
  • On the last two points, however, account must still be taken of the half-income procedure, which has made the discharge different.

Indirectly:

  • Reduction of gift tax/inheritance tax by up to 25% after allowance since 2010
  • Donation of a business to relatives and the assets contained therein are de facto tax-free

The bottom line is that I am sure that the few income earners for whom the soli still exists have already brought it in several times through these and other discharges in order to be able to pay the soli in its current form for another 30 years.


Somewhere the money has to come

Surely, for the 8 billion that the federal government can still use, you could cut pointless spending, make higher debts, or introduce other taxes (for example, the financial transaction tax on options). Here’s a small example, if you forgot: for example, to finance the flood damage of 2002, the corporation tax was increased to 26.5%.

At the moment, we need these eight billion, for example, so that we can transfer a maternal pension to the dentist’s wife without a means test, to which she will no longer have to pay a soli. But this is a different issue.

Until someone gets it better, the current reform will remain a way for me to fund our state in a meaningful way.


Stop complaining at last !

The left complains that their clientele has nothing to do with the solos, because they are not predisposed to the solo. In addition, a wealth tax should be introduced immediately. If I never had to pay the tobacco tax, I don’t demand that when it is abolished, I get 50€ on top of it every month because I never smoked.

The FDP complains because the poor upper 5% continue to be predisposed. A round of pity for the poor CEO or the millionaire who has to pay as much as before and much less than 20 years ago.

The fact that 90% of taxpayers benefit from the bottom line and that this reform follows the spirit of the social market economy enshrined in our Basic Law is evidently forgotten.

No one has to pay any more ! No taxes will be abolished ! This is a step in the right direction.

And now stop complaining and rejoice, because 90% of you will have more money in your pocket than before.

That had to be said.


What is your personal solo balance sheet? Positive or neutral ? Maybe I’m completely wrong ?

Let me have a short comment here !


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Also take a look at my other projects: the charity depot and the self-test warrants.

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