DIW: Billion-dollar potential in wealth tax - But risks - Germany's Proposed Wealth Tax Could Raise €147 Billion Annually—But at What Cost?
A new study by the German Institute for Economic Research (DIW) suggests a wealth tax could bring in €147 billion each year. The proposal targets the richest 1% of the population and has gained support from the Left Party. Germany abolished its wealth tax in 1997, but calls for its return are growing louder. The proposed tax would apply only to fortunes above €1 million, with business assets exempt up to €5 million. Rates would start at 1% and rise progressively, reaching 5% for wealth over €50 million. For those with more than €1 billion, the rate would jump to 12%.
The DIW study highlights potential risks, including wealthy individuals moving abroad and reduced investment. To counter this, researchers recommend a gradual introduction and international coordination. The Left Party has backed the idea, arguing it would help address inequality and fund public services.
Germany scrapped its wealth tax nearly 30 years ago, but rising wealth disparities have reignited the debate. Supporters claim the tax would make the system fairer, while critics warn it could harm economic growth. If implemented, the tax could reshape Germany’s revenue system by targeting the ultra-wealthy. The €147 billion estimate assumes strict enforcement and limited avoidance. Whether the proposal gains wider political support remains uncertain.
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