While financial assets are fully taxed, business successors can currently use extensive benefits to avoid endangering jobs. The SPD now proposes to levy inheritance tax on business assets and defer their payment over several years – or to have the state share the liability through silent partnerships.
However, economists warn of massive side effects. A deferment would only change the payment deadline, not the burden. Government participation would be tantamount to partial nationalization - with potentially negative effects on investment and location attractiveness. According to the Federal Statistical Office, inheritance and gift tax currently accounts for only 1.4 percent of total tax revenue. Even a significant increase could not close the federal budget gap.
The German economy is already in a phase of weakness: investments are stagnating, corporate insolvencies are rising, and according to industry associations, more and more medium-sized companies are relocating parts of their production abroad. Critics warn that higher wealth taxes could reinforce this trend and burden family businesses.
The coalition partners have been reserved so far. While CDU parliamentary group leader Jens Spahn expressed sympathy for a fairer distribution of wealth, many politicians see the risk of sending the wrong signal to investors.
Whether the SPD continues its initiative now depends on the Federal Constitutional Court's ruling - and on whether the coalition prioritizes tax debates or growth stimuli in the current economic situation.
