The Left has put forward a proposal for a progressive wealth tax that could significantly increase tax revenue. According to a study released on Friday by the German Institute for Economic Research (DIW), a tax rate of 1 % to 5 % on assets exceeding €50 million could generate up to €147 billion per year. Individuals would enjoy a personal allowance of €1 million, while corporate assets up to €5 million would remain exempt.
The analysis shows that the burden would fall almost exclusively on the wealthiest, concentrating on the uppermost tier of the distribution. The richest 0.1 %-those with wealth beginning at €13.8 million-would account for 91 % of the revenue. The top 0.01 %-those with wealth starting at €76 million-would shoulder 72 % of the tax. The researchers argue that this concentration could markedly reduce wealth inequality.
However, they caution that tax‑planning strategies and reduced investment could curtail the expected revenue. When the elasticity of taxable assets is high, projected gains could drop by as much as 60 %. Therefore, the study recommends introducing the wealth tax gradually and in coordination with other countries to mitigate adverse impacts on investment and location attractiveness.
