A few inherit millions, many others nothing: According to a proposal by the German Institute for Economic Research (DIW), this wealth inequality can be reduced with a state donation of up to 20,000 euros for all 18-year-olds.
This "basic inheritance" is to be financed either through an inheritance or wealth tax.
This would significantly reduce inequality in Germany, depending on how it is structured, according to a study published by the Reuters news agency. “If we really want to create“ prosperity for everyone ”in the foreseeable future, then we should reduce the high level of wealth inequality in Germany through redistribution: by giving the non-owned half a basic inheritance to build up wealth, which is financed through taxes on high wealth”, said the DIW -Tax expert Stefan Bach.
In the coalition agreement between the SPD, the Greens and the FDP, measures are foreseen to support wealth creation - such as promoting home ownership, improving company and private pension schemes and increasing the lump sum for savers in income tax.
“That is going in the right direction, but it should only reduce the great inequality in wealth moderately and over the long term,” said Bach.
Basic inheritance could significantly reduce inequality
"More charming would be the idea of a basic inheritance in which all 18-year-olds receive start-up capital from the state - not in cash, of course, but with usage requirements for training and further education, the acquisition of home ownership, self-employment or business start-ups." The Gini coefficient, which applies worldwide recognized standard measure of inequality, would decrease by 5 to 7 percent.
According to the Berlin researchers, the lower half of the population has no wealth worth mentioning.
The richest 10 percent alone own more than two thirds of all private wealth, the richest percent 35 percent and the richest 0.1 percent up to 20 percent.
"This means that wealth in Germany is very concentrated in comparison to other EU or OECD countries with a similar income distribution," writes the DIW.
"What is particularly striking is the relatively low wealth of the middle class." The great inequality in wealth continues through inheritances and gifts. Half of the population has practically nothing inherited, but very few receive a great deal, according to the study on behalf of "Forum New Economy".
With a start-up capital of 20,000 euros for all adults, the basic inheritance would cost around 15 billion euros a year, according to the calculations.
Including further funding programs and relief from real estate transfer tax, this could be financed by increasing wealth-related taxes.
A reform of the inheritance tax, a higher taxation of real estate profits and a wealth tax for the very wealthy would come into question.
"Inheritance tax in particular is unpopular with many - although very few are affected," said Bach.
"If the tax increases were used for a basic inheritance, the tax increases would certainly be easier to convey to the rich."Keywords: