23 April 2021

Improper Property

I am a big fan of dissenting opinions. When they were introduced at the Bundesverfassungsgericht in 1970, they were rather controversial; many feared that it would damage the Court’s authority to expose its internal disagreements in this way for all to see. But that didn’t happen, on the contrary: it made the court stronger, not weaker, to display proof that its interpretation of the constitution is the result of the struggle of opinions and counter-opinions, that one always can and indeed sometimes does see things differently even within the adjudicating body. The court must convince and be convincible. It’s not just the mouth of the law and not a herald of revealed truth. It exercises its standard-setting power through the reasons it gives, and that implies that it must sometimes be prepared to stand corrected. Its authority depends on it.

Today, on the day the Bundestag passed a 50 billion Euro supplementary budget to cover the costs of the Covid pandemic, I’d like to recommend a very specific dissenting opinion for your reading. It dates from 1996 and was penned by the legendary Ernst-Wolfgang Böckenförde.

The judgement to which this dissenting opinion is attached declared a core provision of the German Property Tax Act to be incompatible with the Basic Law because it effectively privileges real estate over other assets without any reasonable ground. This is in violation of the principle of equality, a finding to which Böckenförde concurred. What provoked the protest of the Freiburg constitutional law scholar, however, was a statement that was much more far-reaching:

According to the majority of the Senate, the Basic Law sets very fundamental limits to the legislator’s access to the taxpayers’ assets. Only the yield of the assets may be taxed, real or potential, but not the assets themselves. They are the taxpayer’s property, protected by Article 14 of the Basic Law, and “a core element of the success of his own activity in the economic sphere”, which must be “preserved” for him as an expression of the fact that property is in principle meant for private use (Privatnützigkeit) and for its owner’s disposal. But there is more: the legislature must also observe limits when taxing the yield: Article 14 demands that the use of property should “at the same time” (zugleich, which could also be read literally as “equally”) serve the public good, which was – to the utter surprise of most scholars of constitutional law – interpreted by the Senate majority as an instruction that the result must at most remain “in the vicinity to a half-share” between the owner and the public – the infamous “half-share principle”.

The ruling came at a time similar to ours in at least one respect: there were enormous financial burdens for the public to shoulder and distribute, namely the costs of German unification. With the ruling on the property tax, the Second Senate of the Federal Constitutional Court pulled the wealth of the West German bourgeoisie swiftly under the protective shield of the fundamental right to property, safe from any danger of being called upon, alongside (labour) income, consumption, creditworthiness and social pressure-bearing capacity of the Germans, to finance these costs.


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The theory behind this was older, of course. It dates back to the early 1980s, the time of Ronald Reagan and Margaret Thatcher and the Chicago School, and its originator was a man who later went on to become Angela Merkel’s unsuccessful shadow Secretary of Finance in 2005, mercilessly mocked by Gerhard Schröder as a quixotic “professor from Heidelberg“: Paul Kirchhof. In 1980, he had presented his theory on “Taxation and Property” before the venerable Staatsrechtslehrervereinigung.  Up until then, most believed that it was parliament’s job to protect citizens from excessive taxation; after all, that’s what it had been invented for originally. They were wrong: according to Kirchhof’s doctrine, it is the Basic Law that protects the tax-paying property owner1) from parliament.

In 1987, Kirchhof was elected to the Second Senate of the Bundesverfassungsgericht and set about translating his theory into practice with unparalleled assertiveness and success. Some of his achievements, however, did not last long after his term of office ended in 1999: in 2006, his former colleagues in the Senate made it clear that his so-called “half-share principle” was just a general legal view unrelated to the case at hand (obiter dictum) and thus not suitable as a constitutional standard with the force of law, nor indeed in any other respect: in fact, there could be no question of a “generally binding, absolute maximum burden limit in the vicinity to a half-share” at all.

The limit on the taxation of assets, however, which the Court also erected in 1996, is a trickier matter. The ruling explicitly states (para. 48) that it regards the limit to the tax legislator’s access to the “yield capacity of the assets” as opposed to their substance as a essential reason for its finding, which would make it legally binding (§ 31 BVerfGG). This is a matter that is not as easy to flick off the table as the “half-share principle”.

This is where Böckenförde’s special opinion comes into play. In unprecedented severity, he attests to his colleagues in the Senate that they basically enacted a new constitutional standard of property taxation completely unrelated to the case at hand, and thus have exceeded their competences (one might even say: decided ultra vires) and encroached on those of the legislative power. Above all, however, Böckenförde emphatically disagrees with the thesis that the taxpayer’s fundamental right to property limits the legislator to tax only yields and not substance. Kirchhof’s theory, he argues, amounts to placing the holding of assets under special property protection which is denied to the acquisition and disposal of assets. “The Senate breaks …, without any constitutional justification, these consolidated assets out of the overall spectrum of taxable assets and decrees for them an (…) absolute protection of substance. In principle, the tax legislator is deprived once and for all of the possibility of access to such assets, irrespective of the potential of capacity (Leistungsfähigkeit) that is expressed in them. He is thus also condemned to powerlessness from the outset in the face of the momentum of cumulating capital.”

Here we are, a quarter of a century of cumulating capital later. Some sit in their inherited freehold apartment, its market value rising to ever more dizzying heights, and rejoice at the stable valuation of their securities portfolio in what is supposed to be the worst crisis since WW II. Others work their butts off from dawn to dusk and will still never even come close to the possibility of building up any “consolidated assets”, let alone bequeathing them to their children one day. So much for “the core of the success of one’s own activity in the economic sphere”.

The Bundesverfassungsgericht has declared the Property Tax Act incompatible with the Basic Law in 1996, but not null and void. Theoretically, the law still exists, like a broken car in the garage waiting to be repaired. The FDP parliamentary group is calling for it to be thrown on the scrap heap, allegedly for reasons of legal certainty (they’d say that, wouldn’t they?), and on Monday there was an expert hearing on this in the Finance Committee of the Bundestag. Interesting is not least the controversial question of whether the Länder could currently make use of their subsidiary legislative competence and enact property tax laws of their own as long as the Federal law is technically out of function. Most experts say they can’t, and Gregor Kirchhof, a law professor from Augsburg and son of the aforementioned Paul from Heidelberg, has proposed that, to be on the safe side, a § 2 be included in the repeal law, according to which the federal government continues to make, so to speak, negative use of its legislative competence in order to maintain the blocking effect for the states. Federal property tax law would thus henceforth consist solely of the statement that there is none.

It’s absolutely plausible that the FDP finds this idea attractive. I hope, though, that no one else will, and in any case it’s probably too late to get any legislation done before the federal elections in September. After the elections, however, the legislature should boldly get to work and enact a shiny new property tax law that fixes the equality issues that were its undoing 25 years ago, and on top of that ensures that the “consolidated assets” of Germans will be duly put to use to finance the current burdens to an extent adequate to the seriousness of the situation. There will be no shortage of constitutional law professors who will sternly admonish that under no circumstances the law must go any further than taxing the yield of assets. The legislator should calmly ignore them and take his chances in Karlsruhe. Böckenförde shows the way.

The week on Verfassungsblog

Speaking of the Second Senate: Contrary to what many had feared and some had hoped, the Bundesverfassungsgericht has not stopped the ratification of the Own Resources Decision and thus the Covid reconstruction fund “Next Generation EU” after all. MARTIN NETTESHEIM places the decision in the context of previous case law on identity and ultra vires control. HANNO KUBE does the same and considers an ultra vires decision in the main proceedings conceivable. CHRISTIAN WALTER and PHILIP NEDELCU demonstrate that the Court seems to have accepted that potentially ultra vires acts have at least temporary legal effects.

Over at the ECJ, Advocate General Pikamäe has published his opinion in the current proceedings on the independence of the judiciary in Hungary. PETRA BÁRD reports.

In a Maltese case, the ECJ has expanded its repertoire in the fight against ‘rule of law’ backsliding with Article 49 TEU. MATHIEU LELOUP puts the seminal Repubblika decision in context.

In Poland, meanwhile, the ruling PiS party, with the help of its minions at the Constitutional Court, has taken down the last independent supervisory body in the constitutional structure of the state: Adam Bodnar, the Ombudsman for Civil Rights and in office on a transitional basis after his term expired, has to quit the field. MARCIN MATCZAK describes how hijacked democratic institutions hijack other democratic institutions.

To strengthen citizens’ trust in the face of rampant corruption, Ukraine has come up with an innovative mechanism. International experts are given a decisive role in the selection of candidates for public office. Three high-ranking judicial representatives, ANTHONY HOOPER, TILMAN HOPPE and JOSÉ IGREJA MATOS, have made themselves available for this purpose and defend this procedure against attacks from critics.

Puerto Rico is still a kind of colony of the United States. That may be about to change, but exactly how is a matter of controversy: Two competing bills are being debated in the US Congress. CHRISTINA D. PONSA-KRAUS reports on the constitutional background to the Puerto Rico status debate.

The ECtHR has handed down its judgement in the case of journalist Ahmet Altan, who is in pre-trial detention in Turkey. However, the Strasbourg Court still refuses to recognise that this case, like all the others, is not an isolated one, but shows a clear pattern of systematic disregard for human rights. DILEK KURBAN is not the only one who is appalled by this.

Since this week, the German Bundestag has been debating a new law about human rights along the supply chain, and what Germany could learn from Mexico and Colombia in this respect is shown by DIANA SANABRIA and DANIEL SCHÖNFELDER.

Do “cancel culture” and “political correctness” endanger academic freedom? KARSTEN SCHUBERT thinks not and gives four reasons why we need to rethink academic freedom in Europe.

On 3 April, the law against right-wing extremism and hate crime on the net came into force. It balances between freedom of expression and dignity-based personal rights, but equality, which plays a big role in offensive hate speech, is a strange blank space. NORA MARKARD and EVA MARIA BREDLER propose a solution.

In Germany, the government seeks to extend the duration of the general exemption of seasonal workers from social security contributions. According to VLADIMIR BOGOESKI, this threatens to further exacerbate the precariousness of those affected.

The Hohenzollern restitution claims have been a source of heated dispute for months. In this context, the Berlin Regional Court has classified a critical statement by the historian Winfried Süß as a false “statement of fact” and consequently prohibited him from making it. In view of the freedom of opinion and research of the academics involved, this is neither convincing in terms of effect or method, finds KARL-HEINZ LADEUR.

The Federal Constitutional Court’s decision on the Berlin rent cap kept us busy this week as well. JOACHIM KUMMER sees the ruling as bad news for the protection of tenants. Controlling rents through the civil law on tenancy agreements is much less effective than enforcing price regulations. THOMAS ACKERMANN looks at the federalist side of this issue and criticises the fact that the blocking effect of federal law here is only there to prevent a state law arrangement that the federal government could not make itself due to regional differences.


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So much for our output this week. In our crowdfunding campaign, unfortunately, for every three steps forward, we take two steps back. Quite a few have been cancelling their membership, which is of course perfectly fine, but the result is that this week we are barely closer to our target of €4000 than the last. Are you still undecided? If I could give you a little nudge….

All the best, thank you and see you soon,

Max Steinbeis


1 “Tax law only draws on the owner, not on every able-bodied citizen, to finance the tasks of the state. The state community tolerates a citizen leaving his talent idle and refusing to contribute to the general financial needs.” P. Kirchhof: Besteuerung und Eigentum, VVdDSR 39, p. 226.

SUGGESTED CITATION  Steinbeis, Maximilian: Improper Property, VerfBlog, 2021/4/23, https://verfassungsblog.de/improper-property/, DOI: