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Germany’s Constitutional Court has upheld the solidarity tax, originally introduced after the reunification of East and West Germany in 1991. The tax, which is currently set at 5.5% for the highest income earners, businesses, and investors, was challenged by members of the Free Democratic Party (FDP) on the grounds that it violated the constitution. They argued that the tax, tied to the now-expired Solidarity Pact II, discriminated against the minority of high earners still subject to it.
However, the court ruled that the tax is still necessary to address the ongoing costs of reunification, which continue to affect infrastructure and development in the former East Germany. The ruling highlighted that although most taxpayers (90%) are exempt from the levy, it is still justified as it impacts only the wealthiest, making it “fairer than ever.”
In 2024, the tax contributed approximately €12.6 billion ($13.6 billion) to the government’s budget, and its removal would have created a significant fiscal gap. The ruling ensures that the government will not be required to refund the €65 billion collected since 2020.
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