Sunday, November 3, 2019

Albrecht Glaser, October 18, 2019, Property Tax Reform


Albrecht Glaser
Property Tax Reform
German Bundestag, October 18, 2019, Plenarprotokoll 19/119, pp. 14695-14697


[Albrecht Glaser is an Alternative für Deutschland Bundestag member from the central German state of Hessen. He is currently a member of the Bundestag finance committee.]

Herr President. Right honorable ladies and gentlemen.

The set of laws submitted by the Federal Government and the government delegations is an attempt to solve, shortly before the expiration at the end of the year of the period fixed by the Federal Constitutional Court, a pressing problem of many long years, come Hell or high water.

The property tax [Grundsteuer] is a fossil from agrarian society, when use of the land was still a major source of wealth. It was extended at different times and at different places to land use for dwellings. To make the tax basis measurable, it must be assessed. An assessment of this tax basis for long appeared simpler than an ascertainment of income. In the course of the construction of the income tax system of the 19th Century, the proceeds from the leasing of land, from forest use and from the rental of buildings was logically subsumed under the income tax. There, undisturbed by many newly discovered taxes levied due to fiscal greed and having eternal life, simply continued the property tax along with the income tax, while the state authorities acknowledged no rational, constitutionally legitimate tax collection. That for long disturbed nothing – until modern tax theory, directly developed by the Federal Constitutional Court in tangible ways, raised the issues of basis of collection, equity and the solvency of obligations, in which modern tax theory required an economic relation between tax yield and the expense of collection.

According to all of these criteria, the property tax appears to be antiquated. Two simple instances: The property tax yearly yield comes to 14 billion euros. That is around 2 percent of the tax yield of the entire state. To attain it, 35 million objects of taxation, foremost houses and buildings, must be periodically assessed. For that are required many thousands of tax officials who soon thereafter should be laid off – there are those who certainly are not – who nevertheless are thereby only temporarily employed; in some cases, they paint the Finance Office. Since the assessment in the past did not come off and last took place in 1936, the Federal Constitutional Court must declare as unconstitutional the property tax collected for this year alone. It did that, with precedents and copious statements, in 2018, something which had long been expected and foreseen by every professional person.

The Federal Constitutional Court therefore need not further concern itself with the theoretical basis of the property tax. On the other hand, it has held that the legal authority [Geseztgeber] must make ascertainable the basis of a tax charge in law. As the basis for the present bill, which regards the value of land as the taxable object [Steuergegenstand] and prescribes fixed procedures of assessment so as to ascertain it, the revenue estimate [Sollertrag] is the taxable object.

What however is this revenue estimate? You all may be astonished. When revenue is realized from real estate, then it serves as a basis for the income tax [Ertragsteuer] When however one uses his home or dwelling himself or has in some way an exterior area, then one has no revenue. Besides: In active agriculture, the left hand raises the property tax while it is subsidized with the right. That however is only at the margin.

The revenue estimates are thus a fata morgana, a perverse mental construct, and will always, if not joined to a taxable object, be regarded as debts. Thus, 80 percent of indebted buildings pay the same property tax as debt-free buildings. That pertains to the theme of performance ability. The actual revenues were already taxed. To twice lay hold of the same taxable object cannot be constitutional.

            Britta Haßelmann (Grünen): What then does the AfD actually want?

The confiscatory nature of this tax is thus evident. Certainly the fantasy of legality is a localized one and that will continue to accompany this project. The widow with her little pension, living in her own home, will be reduced by the property tax, as well as the broadcasting tax, to a minimal existence. That completely stinks of unconstitutionality and will be regarded as such by sensible minds [klugen Köpfen].

Since the property tax by means of leasing can be further extended to the renter, the metropolitan renter especially will wonder, despite the present proclamations, when initially will the new evaluation be translated into new charges. In a city like Berlin with a multiplier factor [Hebesatz] of over 1,000, one of the highest in the entire Federal Republic, this policy hostile to renters will hopefully produce a corresponding reaction.

Operation Property Tax is already perceived in several states as unwelcome; it seems alien [unheimlich]. These states therefore demand – as, so to speak, an emergency exit for heroes – an opening by means of the Basic Law for one’s own legislative potential. And here is required an alteration of the Constitution. You see, ladies and gentlemen: Chaos at all levels.

The AfD therefore introduced a model proposal for local governments [Kommunen] which have exclusive authority over property tax revenue, presently yielding approximately 12 percent of their tax income, and which procures a suitable replacement income which nevertheless respects the tax code [Steuersystematik], constitutional law and the economics of tax collection.

Had reasonable consideration been given earlier, there would not now be the time emergency. Inability to reform, ladies and gentlemen, has consequences.

Reference must yet be made to one curiosity. The Clara Zetkin communists in this house now want a fight with 45 percent of citizens who have procured their own homes. This fight must be fought. It must be fought in the country in which exists the lowest rate of home ownership in the entire EU. 45 percent of the citizens of this country own property and over 80 percent have yearned for decades to obtain it permanently…We can fix that: Taxes on assets, even when there is no aim of revenue, ladies and gentlemen, that is socialism. It is unconstitutional and must therefore be a matter of interest for the Constitution Defense Office. Instead of being a country advancing home ownership – that for once could be done – the responsible citizen must be attacked; since with him, no revolutions can be made. That is the problem.
Since this bungled property reform, cobbled together under pressure of time, requires an alteration of the Constitution, the little Great Coalition needs to muster a constitution-altering majority. How to make room for the FDP and the Greens?  We do not know the consideration of the government coalition. Perhaps there will be judicial selections for the higher courts?

In any case, this time it has collapsed. For one, the construction land tax – designated Property Tax C – receives an extra increase in the multiplier factor. For another, it was promised by the minister that the administrative expenditure would be maintained within limits.

            Christian Dürr (FDP): That is rubbish. That’s in the law, Herr Glaser. 
            You don’t get it!

            Britta Haßelmann (Grünen): He doesn’t get anything!

Dear Herr Dürr, if you would for once adhere to the basic rules of civilized communication.

            Christian Dürr (FDP): Thus spake the just! That was good!

            Stephan Schmidt (Grünen): Cite what you said in committee!

            Michael Grosse-Bömer (CSU-CSU): You have falsely cited it!

If one knew how the sausage was made, one would not eat it, - a feeble laugh does not help, Herr Dürr – goes a butcher-sceptical saying. So something similar also goes for laws unauthorized by the citizens.

Michael Grosse-Bömer (CSU-CSU): Take a look at Bismarck! He had something to say to that!

The constitutional Court must consider this dubious law, and will consider it; upon that, you can proceed. The result is clear. When over 60 percent of the citizens are discontent with the work of this government – according to the latest poll – then there are good reasons for that. This ruin of a property tax reform is part of that.

Hearty thanks.

Michael Grosse-Bömer (CSU-CSU): We indeed do not know what the AfD wants but it was a beautiful recital!




[Translated by Todd Martin]