Why are the rich no longer taxed?

The rich already pay most of the taxes

Strong shoulders should be loaded more? That's already the case today. An increase in the top tax rate is of little financial benefit. It would be much more important to give the individual more opportunities for prosperity.

Ownership obliges, Ralf Fücks reminded of this a few days ago in this newspaper. One can only agree with that. Anyone who treats their property irresponsibly brings the social market economy into disrepute. However, what exactly “irresponsible” means must be checked and decided under the rule of law.

This applies in every liberal community - and it applies with special moral weight in a nation like the German, which, with National Socialism, has had a cruel past of unfounded expropriation of Jews.

Every political campaign against the rich and wealthy must be seen against this background. It must not be based on resentment and envy - and certainly not on class or racial hatred. The common good as the ultimate justification for expropriation must be so narrowly defined that it never becomes a gateway for blind anger and resentment.

On the other hand, it is perfectly legitimate to be seriously concerned about the distribution of wealth in our society. Are income and wealth too unevenly distributed? Which yardstick counts? And above all: what can we do? Ralf Fücks is right: After 30 years of globalization, it is definitely time to re-examine and discuss the situation - galloping up to a federal election, which is of great importance for the future of the social market economy.

In fact, wealth is unevenly distributed: According to DIW, five percent of the population owns 55 percent of total wealth, the top one percent alone make up around a third. Don't you have to intervene hard and redistribute it?

The answer is: They are already doing it, and in particular through income tax. One percent of all income taxpayers, the absolute top earners, financed 21.5 percent, the richest ten percent 55 percent and the richest 25 percent almost 77 percent of the total revenue of the most important tax in Germany, which the state now receives around 300 billion euros in normal years brings in revenue.

You do this because from an annual income of around EUR 270,000 each additional EUR is taxed at 45 percent, from EUR 57,000 (up to EUR 270,000) it is 42 percent.

Finally, there is inheritance tax

This happens year after year - as a kind of "installment payment" on the accumulation of assets over the course of a lifetime, and at the end there is an inheritance tax that varies depending on the degree of relationship and the amount of the assets, but at least increases from a fortune of 26 million euros amounts to 30 to 50 percent.

The specific question arises: Do we really want to tax the wealthy in Germany even more heavily than we are already doing? Should the marginal tax rate on income and inheritance really be well over 50 or even 75 percent so that the redistributive amount increases again drastically?

One thing is clear: a slight increase of a few percentage points brings little fiscal benefit and leaves the distribution of income and wealth largely unchanged.

It is strange: The public complaint about social inequality moves, as with Ralf Fücks, at a high moral-philosophical level, but does not go into the lowlands of tax policy reality. This is especially true for those who, from the green, social democratic and socialist side, are morally demanding more redistribution and tax progression, but are careful not to cast their ideas into concrete figures.

However, these figures are urgently needed if various redistribution projects are to be discussed with political reason. Otherwise everything remains nebulous. The discussion must be conducted comprehensively - also with a view to the consequences of taxation for the attractiveness of Germany as a business location in international competition.

The liberal counter-position, on the other hand, is simple and clear: we already have a highly progressive tax system. And if we want to change the distribution of income and wealth in our society in the long term, then we have to do it differently: by attacking the causes, not by curing the symptom.

Above all, we need more equal opportunities. The state must create the framework for this: with better educational opportunities for poorer families, better opportunities to finance their own homes, better opportunities for employees to participate in company capital, and better opportunities to provide for old age.

And above all: full employment with rising wages, because only then is there the prospect that the growth rate of incomes of the masses will again exceed the returns on wealth of the wealthy - as in the decades of the post-war period, which today are gladly (and rightly!) Considered paradisiacal The epoch of equality.

The demographic development definitely gives us the chance to get closer again. But not through more taxation of the rich, but through equal opportunities for the poor.

This article first appeared on Welt Online on September 27, 2020 and can be found here.