The SPD, the Greens and the Left want to ask the rich and super-rich in Germany to pay more. They overlook the fact that reintroducing the wealth tax would actually be tantamount to sabotaging our economy.
Let’s imagine that the SPD and the Greens could govern without the FDP, in pairs or together with the left. Then the reintroduction of wealth tax or a wealth levy would be one of their first decisions. In any case, the “rich and super-rich” would be asked to pay heavily. For reasons of justice and to fund other social benefits.
However, what the left-green redistribution politicians studiously overlook: the private fortunes are mainly in family businesses. And they form the backbone of our economy.
In 2020, six million people worked in the 500 family businesses with the most employees, 1.5 million more than in 2011. For comparison: the 26 DAX companies in which no one family is in charge had only 3.1 million employees in 2020. This was determined by the Institute for SME Research at the University of Mannheim. The Foundation for Family Businesses commissioned the study.
The family businesses, not just the largest 500, are a real job engine. They employ 60 percent of all workers and train more young people than the big corporations. According to the study, the top 500 even hired new employees during the Corona crisis, while the DAX companies cut jobs. Anyone who burdens the owners of family businesses with a wealth tax or property levy ultimately endangers jobs.
The money of the “rich and super-rich” is not primarily invested in swanky villas at home and abroad, fast private planes or sleek yachts. There are such cases too. But most of the private wealth is tied up in the three million family businesses. However, this accumulation of assets was and is favored by the inheritance tax regulations, which are very favorable for company heirs.
The reform for the new property tax is complex – and this year it will require owners. You have to submit some data to the tax office. You have to be very precise and observe special deadlines. In our large guide you will find all the information you need to know in a compact form.
According to the study, the 500 family companies with the most employees also include four DAX companies whose capital is largely in the hands of families: Volkswagen, Beiersdorf, Henkel and Merck. Here the separation between the private assets of the shareholders, who are supposed to pay wealth tax, and the business assets is clear. In the vast majority of family businesses, however, this distinction is difficult. This applies in particular to partnerships and the self-employed.
What is also mostly overlooked: the private assets of the shareholders of family businesses often serve as the company’s reserve fund. Private assets are often used for larger acquisitions when the company’s liquidity is not sufficient for this, but the acquisition is necessary for strategic reasons. Also, during the 2009 financial crisis and pandemic, many owners used private wealth to avoid layoffs while other companies cut jobs.
The fact that the German economy is (still) more competitive and efficient than others is not least the result of the ingenuity and daring of small and medium-sized enterprises. In Germany there are 1,300 family businesses, some of which are hardly known, that are world market leaders. In the US, which has four times the population, only 366 of these “hidden champions” are based.
So if you want to tax the “rich” higher, you take working capital away from those who ensure innovation in this country, maintain existing jobs and create new ones. That would be exactly the wrong recipe for a quick economic recovery, especially in view of the consequences of Corona, inflation and the energy crisis.
Of course, among the “rich and super-rich” there are also those who cheat the tax authorities – and thus all of us – and bunker their money in black money accounts abroad, for example. Others have moved their primary residence abroad to save on taxes. For both groups, taxing their assets would be in vain. In any case, fraudsters are not a case for the tax authorities, but for the public prosecutor.
Imposing a wealth tax would undoubtedly create new tax evaders and business relocations abroad. But many medium-sized entrepreneurs and employers cannot go abroad for a variety of reasons. They would be hit hard by a wealth tax – and with it their employees. The “job engine family business” would be severely throttled.
Politicians and parties who see the wealth tax primarily as a means of redistribution and partial expropriation should not be bothered by this. However, if all this has a negative impact on growth figures and the employment situation, it will be too late. Once the “job motor family business” has been throttled, there are only losers. Even the tax authorities can then no longer get much from the “rich and super-rich”.