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Revival of Wealth Tax: Considerable Potential Revenue Despite Tax Avoidance to Be Expected

Report of October 17, 2012

Abstract:
Following a Federal Constitutional Court sentence, wealth tax has not been levied in Germany since 1997. A possible revival has since regularly been the subject of political debate. Several German federal states are currently preparing to submit a bill to the Bundesrat. A basic scenario envisages individuals (natural persons), corporations, and other legal entities being taxed at a uniform rate of one percent, with a personal allowance of two million euros to be granted for private wealth. DIW Berlin has analyzed the revenue from such a wealth tax. Since wealth in Germany is highly concentrated among the top one percent of the population, the potential revenue is significant despite high personal allowances. Taking into consideration possible adjustments and avoidance by those subject to the wealth tax, it still promises additional tax revenue of 11.6 billion euros.

The complete publication in German by Stefan Bach and Martin Beznoska in:
DIW Wochenbericht 42/2012 (PDF, 143.11 KB)

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