Financial easing for wealthiest individuals

In recent developments, a coalition of advocacy groups, including Network Tax Justice, Citizens' Movement Finance Turnaround, and the wealth organization Taxmenow, have launched a campaign to abolish privileges for the wealthy in inheritance tax. The campaign, titled "Matter of Honor Inheritance Tax: No Exceptions for Billionaires!", aims to level the playing field and ensure fair taxation for all.

The current regulations in Germany stipulate that an acquirer must continue a business for at least five years to avoid taxes on the inheritance of businesses, a measure intended to secure the continuation of craft businesses and Small and Medium Enterprises (SMEs). However, most inheritance cases fall within the tax-free allowances of 500,000 euros for spouses and 400,000 euros per child.

In an extraordinary move, Sarah Yolanda Koss, a citizen, has redistributed a 25 million euro inheritance to 77 initiatives, setting an inspiring example of wealth redistribution. Meanwhile, the taxable acquisition in the context of inheritances and gifts increased from 58.3 billion euros in 2022 to 64.7 billion euros in 2023, according to the Federal Statistical Office.

Poverty researcher Butterwegge speculates about what he would do with 25 million euros, while Federal Finance Minister Lars Klingbeil (SPD) has proposed a higher taxation of the wealthy. In 2024, the peak of 13.5 billion euros was reached for inheritance and gift taxes, compared to only 5.5 billion euros ten years ago.

However, critics believe these reforms are far from sufficient. Tax law expert Julia Jirmann criticized in January 2024 that the official figures for inheritances are "little informative, even misleading," especially for large fortunes. Jirmann, an advisor to the Network for Tax Justice, has highlighted that 45 wealthy individuals inherited almost 12 billion euros in 2024, paying an average of only around 1.5% in taxes, resulting in a loss of 3.4 billion euros for the state.

The preferential treatment of business assets, which prevents taxes from being paid for the inheritance of businesses in 85 percent of cases, is a significant point of contention. The Federal Constitutional Court has repeatedly criticized this preferential treatment, leading to smaller reform steps by the grand coalition.

The study by Oxfam on wealth distribution in Germany reveals that large fortunes predominantly remain in male hands. The Left Party leader, Jan van Aken, suggests abolishing the need for an exemption review, which would increase revenues without raising taxes for anyone.

The Network Tax Justice, along with organizations such as Attac, Oxfam, and Verdi, criticizes this situation. They argue that the revenues from inheritance and gift taxes belong to the states in Germany and should be used to fund social programmes and reduce inequality. The preferential treatment of business assets could be facing a partial end, offering a glimmer of hope for those advocating for a fairer tax system.