Thread by @MFratzscher

The US tax system is regressive for the very rich. This is similar in Germany, where wealth taxes are much lower than in the US.

Important study by two leading experts, E. Saez and @gabriel_zucman , which is relevant for the current debate in Germany.

brookings.edu/wp-content/upl…

A wealth tax of 1% in the US would not even stop the rise in wealth inequality. A wealth tax of 2-3% would stabilize wealth inequality and generate substantial tax revenues for the government.

12 facts on wealth taxes & inequality in Germany:

Fact #1: No industrial country taxes (income on) wealth less and income of labour more than Germany.

Fact #2: Germany has one of the highest wealth inequalities in Europe.

(This excludes public pension claims, which are not wealth, and even their inclusion does not change this general picture.)

Fact #3:
An unusually high share of 40% of Germans have no net wealth.

Fact #4: Germany has the largest private pension gap among industrialized countries. Low incomes do not allow many to save much during their working life.

12 facts on wealth taxes & inequality in Germany:

Fact #5: More than half of all wealth has been acquired via inheritance (i.e. and not through own work) in Germany and elsewhere — with a rising trend.

Fact #6: €400 billion (or 13 % of annual GDP) are passed on through inheritance every year in Germany — but inheritance tax revenues are only €7 billion (despite a 25% tax rate) due to privileges.

Our study at DIW Berlin (in German):
diw.de/documents/publ…

Fact #7: Germany’s inheritance tax is an example for a regressive tax system: citizens inheriting more than €20 million pay 1.8% in inheritance taxes, those with less then €500,000 pay more than 10%, on average.

Our study at @DIW_Berlin_en :

diw.de/documents/publ…

Fact #8: The share of economic output going to labour is shrinking, the share going to the owners of capital is rising- and in Germany stronger than in most other industrialized countries.

imf.org/~/media/Files/…

Fact #9: A significant share of private wealth in Germany is in the form of family-owned business of the famed “Mittelstand” — which is the backbone of Germany’s economy and generates many good jobs.

Fact #10: Germans save a lot, but they save badly — home ownership at 45% and equity ownership at ~10% are very low. No wonder many Germans hate low interest rates and ECB monetary policy as savings accounts yield negative real rates.

Fact #11: Germans have a highly distorted view of their own position in the wealth distribution: 83% of Germans believe they belong to the poorer half.

12 facts on wealth taxes & inequality in Germany:

Fact #12: Germany’s tax system is much less progressive than one might think — high indirect taxes (and social security contributions) hit low-income families disproportionately stronger.