The constitutional imbalance in old-age provision and the systematic privilege of the professional civil service

The current social debate about financial security in retirement reveals a deeply rooted disproportion that has undermined social justice in the German state structure for generations and distributes the burdens unequally. While the broad population is under increasing taxes, dwindling purchasing power reserves and increasingly uncertain supply promisesIf the public service is suffering, members of the public service continue to enjoy disproportionate collateral, which is fully financed at the expense of the taxpayers. A clear example from the recent past makes it clear how this structural unequal treatment has cemented more and more through judicial decisions and legislative passivity and to this daycontinues. Today’s reality is the direct result of those historical course that should apparently serve the constitutional principle of equality, but in fact continually deepened the material gap between the population groups. Anyone who looks at the current distribution struggles and the ongoing burden on the old-age insurance funds quickly recognizes that theoriginal foundations of these misery were never seriously revised or corrected.

The historical roots of tax disadvantage

Before the legal basis was fundamentally changed in the year two thousand five, there was a striking difference between the two forms of care that was taken for granted for many decades. The payments of the public service were always subject to the full amount of income tax, while the age benefits of the other population only with a flat-rateincome share of twenty-seven percent were used. This structure worked smoothly until the country’s highest legal authority classified this long-standing differentiation as incompatible with the constitution and initiated a profound upheaval. The real trigger for this judicial intervention was an isolated case from the year nineteen hundred ninety-six,which, however, has far-reaching and irreversible consequences. Since the beginning of the 1980s, the judges had repeatedly pointed out that the tax relief for private pensioners was too generous compared to the pension recipients.

The questionable calculation of the tax-free subsistence level

This difference remained justifiable until the mid-1990s, but a massive increase in the basic allowance overturned the scales to the detriment of the private sector employees. The fictitious tax-free minimum subsistence revenue was raised from five thousand six hundred to twelve thousand sixty-nine marks for single people, with married couplesthe corresponding value almost doubled. This drastic adjustment meant that a large proportion of age-receivers did not have to pay any more taxes from now on, since their monthly payments were simply below the new exemption limit. For the pensioners, this situation was fundamentally different, since their income was clearlystayed above the critical threshold. Although their absolute tax burden also decreased, there was still a remaining duty to pay, which was considered unbearable unequal treatment by the decision-makers.

The legal narrowing and the ignored reality

A single pension recipient saw his rights as a result and called the responsible tax court because the compensation allowance to which he was entitled seemed insufficient for the said year. Instead of clarifying this question independently, the lower court presented the dispute to the highest court for a constitutional examination and thus evaded the self-responsibledecision. A simple and appropriate solution would have been to temporarily adjust the compensation allowance or simply adjust the tax bases of both groups. Instead, the judges resorted to a radical intervention that was supposed to reorganize the entire age tax and put legislative violence under massive pressure to act. They announced in the springTwo thousand two a judgment that found a violation of the constitutional equality law and forced the legislature to undergo a comprehensive reform.

The unilateral application of the principle of equality

To justify this decision, the judges referred to the progressive effect of tax law, which allegedly means that pension recipients would be burdened with additional income disproportionately. They also concealed the fact that during the active employment phase exactly the opposite is the case, since the wage tax staggered the employees of the freeEconomy hits the state significantly more than the salaries of the state. In addition, half of the private pensions come from employer’s shares, which were already tax-free during the deposit phase and should therefore remain withdrawn from later taxation. It would therefore only have been logical to tax this half accordingly, which, however, was aware of by the highest authoritywas ignored. The average monthly benefit at that time was seven hundred euros, which corresponded exactly eight thousand four hundred euros over the course of the year.

The mathematical distortions and double the load

Of this sum, only the flat-rate earnings share was used, so that thirty-three percent of the service remained tax-free and did not flow into the assessment basis. This untaxed sum corresponded exactly to the compensation allowance of the pension recipients, which had originally been introduced, to avoid exactly such apparent imbalancesto compensate. Taking this allowance into account, there was no mathematical treatment at all, since both groups were actually charged equally and enjoyed the same tax freedom. However, the Supreme Court deliberately chose an isolated approach that highlighted certain advantages of one group and at the same time the compensation mechanisms of the othergroup systematically hidden. Another argument referred to the state subsidies to the pension fund, which flows from general tax funds and does not come from direct contributions from the insured.

The political motivation behind the judicial decisions

Although this argument is actually correct, it completely ignores the fact that these grants finance politically initiated benefits for which no consideration is expected in the form of contributions and which are outside the actual insurance idea. These are primarily historical obligations, the fulfillment of which is actually the task of the general budgetand not the community of solidarity. The judges thus specifically selected certain facts in order to achieve a desired result, while contradictory connections were hidden. The legislature could have responded to this judgment with a fundamental reform by integrating public service members into the general insurance system.Instead, he created an extremely complex set of rules that replaced the old tax logic from two thousand five and should remain effective until the end of this century.

The systematic preference and the constitutional double morality

This new law is said to ensure even treatment, but in the transition phase leads to a double taxation of private pensions, which burdens those affected with existential pressure. The recipients have to pay tax on their payments, which have already been taxed during their working life, on the payment of the payment, which is related to the allegedly injured requirement of equalityis justified and private pensions are punished. At the same time, the numerous structural advantages of the pension recipients are spared from any constitutional examination and are treated as an unchangeable fact. The calculation according to the last salary instead of the average of the employment years is accepted, as is the significantly higher proportion ofForty-five percent versus the regular old-age security level, which is reached after forty-five years. These privileges are defended with the argument of the different system bases, but this only applies if it benefits the pension recipients.

The arbitrary interpretation of the constitutional principles

The settled case law follows a clear pattern, which always invokes the principle of equality when employees of the free economy enjoy an apparent advantage and this is publicly discussed. When it comes to the betterment of the public service, the same judges suddenly become advocates of the system differences and the traditional principles of theprofessional civil servants who are suddenly considered immovable. This selective application of the Constitution obviously serves to maintain a privileged status, funded at the expense of the general public and is not subject to democratic control. The judges do not speak an objective right, but pursue a one-sided policy that exclusively affects the interests of theStaatsman in mind and divides the population. The traditional principles are arbitrarily overridden as soon as they would have a disadvantageous effect on the pension recipients.

The absurd logic of supposed justice

If an advantage for the public service is obtained from these traditional regulations, this is accepted as a natural situation and justified by the incomparability of the structures. However, if there is an exceptionally disadvantage, the unconstitutionality is immediately declared and the financial burdens are imposed on privately insured persons and pensioners. In doing so, theDownstream taxation of pension payments is not even a real disadvantage if you look at the entire structure of old-age security and evaluate all the parameters together. The narrative of disadvantage can only be constructed and politically exploited through an isolated and twisted consideration of individual metrics. Such mental contortions are reminiscent of theDemand for a special tax for residents of sunny regions or for the absurd idea that people with physical disabilities would have to receive a state care flat rate because they are being pushed.

The end of constitutional credibility

With such questionable argumentation patterns, virtually any unequal treatment can be justified as long as it corresponds to the desired image of the privileged group and suppresses public criticism. The judges have made enormous intellectual effort to persuade private pensioners to be well off than thepension recipients and would therefore have to pay additional taxes. This judgment is so weak in its justification that it would not have existed in any lower instance and would not even pass as an academic examination work, as it has logical breaks. Nevertheless, it contains a veritable core that states that the different supply models ultimately lead to a comparableresult and must not drift further apart. In practice, however, this principle is applied exclusively to further strengthen the position of the public service, while necessary adjustments are consistently rejected to the detriment of the privileged and rejected as unthinkable.