New redistribution mechanisms will be an issue in the tax policy of the future federal government.
(Photo: dpa)
Government formation will also be about tax policy and redistribution. The FDP and Union will vehemently speak out against the wealth tax demanded by the SPD and the Greens. They receive backing from many economists who consider the wealth tax to be detrimental to the economy and far too expensive and time-consuming to levy it.
A strengthening of inheritance tax is usually referred to as an allegedly more sensible alternative. This is good to justify because it taxed “unpowered” asset gains. It is less expensive to collect because it only arises in the event of inheritance or donation and does not require an annual assessment.
In addition, an overload of the company can be avoided through generous deferral options. After all, there is a need for reform in the inheritance tax anyway, because the currently applicable exemption regulations for business assets lead to an excessive privilege of business assets over private assets.
If you take these arguments seriously, it would be an obvious reform to finally effectively address the current privilege of business assets. One could adhere to exemption rules out of economic and employment policy concerns, but limit them in such a way that company heirs do not get away wholly or almost wholly without inheritance tax.
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For example, a minimum inheritance tax of 15 percent on large business assets could almost double the inheritance tax revenue from around seven billion euros in the long term.
Achim Truger is a member of the Expert Council for the Assessment of Macroeconomic Development and Professor for State Activities and Public Finances at the University of Duisburg-Essen.
(Photo: University of Duisburg-Essen, Bettina Engel-Albustin)
But what do most inheritance tax friends propose instead? A “flat tax”, ie an inheritance tax with only one uniform tax rate for all inheritances.
“Flat tax” would only lead to a greater burden on business assets
This would also result in a greater burden on business assets. But at the same time the progressive inheritance tax, i.e. inheritance tax that rises disproportionately with the amount of the inheritance, would be completely abandoned.
If one were to set the uniform tax rate in such a way that the current tax revenue would remain stable, it would have to be around 12.5 percent. Large private assets would then be massively relieved, since the current top tax rates are between 30 and 50 percent, depending on the tax class.
Smaller inheritances and gifts from close relatives, on the other hand, would be even more burdened. For these, the tax rates are currently only seven to eleven percent.
In addition, if you really want to increase inheritance tax, i.e. to generate noticeable additional revenue, with the low standard rate, many more people with a low inheritance would suddenly have to pay higher or even more inheritance tax.
Given a tax that is already quite unpopular among the population compared to the wealth tax, this would certainly lead to massive political opposition to the inheritance tax.
The friends of the standard inheritance tax have to be asked whether they are promoting the abolition of the inheritance tax with their sham package.
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