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Reviving Germany’s Wealth Tax Creates High Revenue Potential

Author

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  • Stefan Bach
  • Andreas Thiemann

Abstract

Compared to the rest of Europe, Germany exhibits an especially high concentration of wealth. According to estimates based on a microsimulation model, a German wealth tax could generate an estimated ten to 20 billion euros per year in revenue—even with high tax allowances—and slightly reduce the inequality of income distribution, as well. Collection costs would range from four to eight percent in relation to the tax revenue, and would thus be comparable to the collection costs for income and corporate taxes. However, it is possible that the tax revenue could be noticeably diminished as a result of tax avoidance.

Suggested Citation

  • Stefan Bach & Andreas Thiemann, 2016. "Reviving Germany’s Wealth Tax Creates High Revenue Potential," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 6(4/5), pages 50-59.
    • Handle: RePEc:diw:diwdeb:2016-4-3
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.525515.de/diw_econ_bull_2016-04-3.pdf
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    Citations

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    Cited by:

    1. Bach, Stefan & Thiemann, Andreas & Zucco, Aline, 2019. "Looking for the missing rich: tracing the top tail of the wealth distribution," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(6), pages 1234-1258.
    2. Dirk Schindler, 2017. "Wealth Taxation, Non-listed Firms, and the Risk of Entrepreneurial Investment," CESifo Working Paper Series 6537, CESifo.
    3. Krenek Alexander & Schratzenstaller Margit, 2022. "A Harmonized Net Wealth Tax in the European Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 242(5-6), pages 629-668, December.
    4. Theine, Hendrik, 2019. "The media coverage of wealth and inheritance taxation in Germany," Department of Economics Working Paper Series 290, WU Vienna University of Economics and Business.
    5. Hendrik Theine, 2019. "The media coverage of wealth and inheritance taxation in Germany," Department of Economics Working Papers wuwp290, Vienna University of Economics and Business, Department of Economics.

    More about this item

    Keywords

    Wealth tax; wealth distribution;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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