Take rich, give to children

Wealth tax, basic child benefits, citizen benefits: the SPD is striving for a new era. What does she look like?

The SPD logo on the sidelines of the party conference in Berlin

DThe SPD passed a series of resolutions at its three-day party conference in Berlin, which ultimately all boil down to redistributing more from top to bottom. On this Sunday, the SPD spoke out in favor of raising a wealth tax again. Previously, the around 600 delegates unanimously adopted a new welfare state concept on Saturday. The party wants to defuse Hartz IV. A basic child benefit is intended to cover the subsistence level of 408 euros per child and month for parents with low incomes and to shrink as their income increases.

“A household in Germany of the 45 richest households has as many as 440,000 other households,” emphasized Lothar Binding, member of the Bundestag, when he explained the party executive’s proposal to revive the wealth tax on Sunday. The ten percent richest would have a per capita wealth of 1.4 million euros, which is eighty times the average. Half of the people, on the other hand, have no wealth at all. You would not have the opportunity to take risks with stocks and the opportunities associated with them.

According to the SPD plan, a wealth tax at a rate of 1 percent should bring in around 9 billion euros for the tax authorities. “Of course with high tax exemptions so that only the really rich have to pay – and with a gradual progression of 1.5 percent and 2 percent for the super-rich,” it says.

The allowance provided is 2 million euros for single people and 4 million euros for married people. The SPD wants to subject not only natural persons, but also legal persons to wealth tax – “while avoiding double taxation”. Otherwise the owners of corporations would be burdened twice: at the level of the AG and as shareholders. There is also talk of exemption rules for business assets in order to avoid substance taxation so that jobs are not endangered.

Few countries still levy wealth taxes, including: America

The wealth tax has not been levied in Germany since 1997 – after the Federal Constitutional Court declared the different burdens on property and other types of property to be incompatible with the Basic Law. A few days ago, Cologne tax lawyer Johanna Hey accused proponents of wealth tax of avoiding the difficult practical questions that stand in the way of their revival in a discussion round.

The President of the Munich Ifo Institute, Clemens Fuest, fears severe consequences if this should happen. A tax burden of almost 47.5 percent today (including the solidarity surcharge) could result in a total tax burden of 72.5 percent, he warned two months ago. Strong evasive reactions ultimately led to less growth and, after a transition period, also to lower tax revenues instead of higher ones.

The number of states that levy a wealth tax has fallen significantly over the years. According to an overview from the Ministry of Finance, these are France, Luxembourg (only for legal entities), Spain, Switzerland and America.

“Want to leave Hart IV behind us”

The SPD refers to the industrial countries organization OECD, according to which the remaining taxes on assets (property tax, inheritance and gift tax, property transfer tax, taxation of realized increases in value) are comparatively low in Germany. With a share of 1 percent, this is only about half of the average burden in the OECD countries. However, “in this comparison it is easy to overlook the fact that property taxes abroad often finance municipal services such as garbage collection, for which additional fees are charged in Germany,” says Fuest.

The SPD has generally repositioned itself in Berlin. “We want to leave Hartz IV behind,” said the Rhineland-Palatinate Prime Minister Malu Dreyer. The SPD wants to defuse the sanctions for breaches of duty. In a first step, a ruling by the Federal Constitutional Court is to be implemented, according to which the job centers may not reduce the monthly benefits by more than 30 percent. She wants to see the so-called socio-economic and socio-cultural subsistence level maintained, to completely abolish stricter sanctions for under 25-year-olds and cuts in housing costs.

The Social Democrats also want to make Germany the “most child-friendly country” in Europe. The SPD wants to bundle the various aids such as child benefit, child allowance, Hartz IV for children and participation benefits. From the new, increased child benefit, 30 euros per month should flow into a children’s card. The money is to be secured for fee-based offers such as sports clubs, swimming pools or music schools.

The new co-party chairman Norbert Walter-Borjans prevailed at the party congress with his push to overcome the debt brake in order to enable more investments. The CDU chairwoman Annegret Kramp-Karrenbauer rejected a change in the constitution in the Basic Law, which limits the federal government’s net borrowing to 0.35 percent of the gross domestic product in normal times. “There’s no point in getting new debt because if there’s too little investment, it’s not because of a lack of money. It’s because existing funds are draining too slowly, ”she told the Frankfurter Allgemeine Sonntagszeitung.