In just two years, only top earners will pay the surcharge. With the basic rent, the finance minister insists that there will be no means test.
Finance Minister Olaf Scholz (SPD) makes the law to abolish the solidarity surcharge pressure: "From 1 January 2021 then 90 percent of those who pay the soli today, he no longer have to pay," said Scholz the "Rheinische Post". Unlike the Union, he does not want to completely abolish the contract, the top earners should continue to pay him. "Why should someone who earns a million a year save more than 20,000 euros? It's about justice."
In addition, Olaf Scholz rejects a means test for the planned basic pension for low-paid. But this is mentioned in the coalition agreement. "The SPD proposal for the basic pension consciously renounces the means test, so that no one is deterred from applying for them," said the Social Democrat of the "Rheinische Post". "In the dispute with CDU and CSU, which are based on the means test, it is about the question: Are only 100 000 people the basic pension – or three to four million?"
The plan of Federal Social Affairs Minister Hubertus Heil (SPD) provides for automatic pension supplements for low-income earners who have paid contributions for at least 35 years. The 35 years include part-time work, time spent on raising children and nursing time. Who then has less than 896 euros pension would get up to 447 euros per month. This could cost around five billion euros a year. CDU party leader Annegret Kramp Karrenbauer insists, however, on the means test.
Scholz also rejected the compromise proposed by the EU side to introduce a means test, while leaving out home ownership that was even used. "We do not believe in a model that only benefits 100,000 in the end, which only causes disappointment and would not be a basic pension," said Scholz. He also defended that part-time workers should also be entitled to the basic pension after 35 years of contributions. "Many women have worked part-time because of raising children or caring for relatives, so if they hear they should not get the basic pension, it's unfair."
Scholz also announced the abolition of the withholding tax of 25 percent on investment income still in this legislative period. "It would be fairer to record such income under income tax law," the minister said. The final withholding tax was introduced in 2009 by ex-Minister of Finance Peer Steinbrück (SPD) and the Grand Coalition. Many wealthy taxpayers benefit from this because their personal average income tax rate is higher than 25 percent.