Solidarity Tax
Categories: Tax
There are moments in history that call for solidarity…and taxes. Hey, someone’s gotta pay for all those solidarity projects, or else it’s all talk. (And yes, we know...when it's your taxes that are going for that park you'll personally never use, you'll vote against it, even though you talk big about how great it would be to have a place for the kids to go.)
Solidarity taxes are taxes, usually imposed by a federal government, on everyone (people and business usually) in order to fund public projects aimed at bringing the nation together. Since they aim at funding a certain project, they’re seen as temporary tax hikes rather than mainstays.
For instance, Germany’s solidarity tax helped them rebuild eastern Germany after The Wall (not by Pink Floyd) fell in 1989. "Mr. Hasselhoff, tear down this wall..." and all that.
The flat 7.5% tax on all personal income for one year helped sew Germany back together. This solidarity tax was reintroduced again years later in 1995, and lowered in 1998.
Some people weren’t happy about this series of taxes, since it seemed to go on a little too long for a solidarity tax, i.e. it started to just look like a normal tax. In 2018, Germany decided to lower it for lower and middle income taxpayers. Yep, it’s still going on. When does a solidarity tax become a normal tax? There’s no official number of years under the term “temporary tax” that solidarity taxes imply, but...probably not decades.
