Report by Felix Paul, B.Sc. student Computer Science
There are currently 22.7 trillion euros in net assets in Germany. Over 65% of this amount is not earned through work, but inherited. Are the rich in Germany getting richer? Yes, according to the experts invited by Q+. Nevertheless, the inequality of wealth distribution has not increased drastically. How so? In a two-day seminar from November 2 - 3, 2023, eighteen students from fourteen different disciplines discussed the topic of wealth distribution in Germany. They worked together with renowned experts Stefanie Bremer from "taxmenow," Dr. Markus M. Grabka from the German Institute for Economic Research DIW Berlin and Dr. Judith Niehues from the German Economic Institute in Cologne.
The initial focus was on the development of wealth in Germany. Dr. Marcus Grabka explained the definition of wealth, presented data on wealth distribution, and introduced the Gini coefficient as a measure of monetary inequality. His arguments that financial inequality has not increased in recent years were debated and mainly attributed to the positive development of property ownership among the middle class and its drastic increase in value in recent decades. Next, student work groups discussed the role of inheritance and possible solutions for a fairer distribution of wealth in Germany, emphasizing an increase in inheritance tax as their preferred approach. Dr. Grabka countered and proved that raising inheritance tax was not an effective instrument against wealth inequality, but that it would serve to increase state revenue and could also have an impact on society as a symbolic gesture.
Other suggestions included better financial education for the lower and middle classes, supported, for example, by a state starting credit for young adults, and promoting the purchase of residential property once a certain threshold for rent payments in relation to property value had been exceeded.
Dr. Grabka's evidence of how "easy" it is to legally pass on large fortunes to the next generation, even without paying taxes, was sobering. As a result, the majority of wealth owned by the hyper-rich is inherited and not earned.
In the second part of the workshop, Dr. Judith Niehues from the German Economic Institute in Cologne shed light on the middle class, the wealthy and the rich in Germany by clarifying the concept of the middle class and examining social, economic and subjective affiliations to various income brackets. In small groups, pro and con arguments were developed as to whether and how the instruments of income tax, wealth tax and inheritance tax could be used to counteract wealth inequality in Germany. In a concluding meta-discussion, the complexity of the topic was emphasized, alternative measures of individual performance were proposed and the importance of education in raising awareness for the promotion of financial equality was highlighted.
In the third part of the workshop, self-employed sustainability manager Stefanie Bremer, who was born into a hyper-rich family with a family business, demanded that she would like to pay more taxes and therefore founded the initiative "taxmenow - Initiative für Steuergerechtigkeit e.V." on a voluntary basis with other wealthy activists in the run-up to the last Bundestag elections in 2021. Among other things, she pointed out that the progressive income taxes paid by employees in Germany are in some cases drastically higher than wealth taxes for the hyper-rich.
This two-day seminar was undoubtedly intense and challenging. Together, we gathered a great deal of statistical knowledge that will enable us to conduct scientifically sound discussions on wealth distribution. Our sometimes heated discussions about possible solutions showed that the topic is not only important, but also raised our passions. Despite the intensity of the work, the enthusiasm of the participants was palpable. It is clear that there is a great need for action on the subject of wealth distribution. The insights we have gained here are the first step on what we hope will be a long road to change, in which everyone must play a part. We would like to thank all participants and experts for their commitment and look forward to continuing these important discussions.
