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German Economics Institute Recommends Wealth Tax

by Ulrika Lomas, Tax-News.com, Brussels

27 July 2009


According to a recent study conducted by the ‘Deutsche Institut für Wirtschaftsforschung’, the largest economics research institute in Germany, increasing tax on wealth could generate as much as EUR25bn annually for the State. The report recommends significantly increasing property tax, and reviving the wealth tax in Germany.

Emphasising that taxation of wealth in Germany is currently relatively low when compared internationally, the report indicates that merely bringing this taxation in line with the European average could create an additional EUR25bn for the government.

Advocating a clear rise in property tax, the study points out that this tax is still based on the value of property in 1964, and on property value in 1935 in former East Germany.

Regarding wealth tax, the institute reveals that by introducing a 1% tax rate, with a EUR500,000 tax-free allowance, the government could bring in around EUR21bn.

Recommending a wider tax base for inheritance tax, the institute is critical of the German government’s recent reform of the tax, maintaining that its decision to grant tax exemptions and privileges to small and medium-sized enterprises was misguided.


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