Young SPD members, a part of the German Social Democratic Party known as Jusos, recently put forward an intriguing proposal during their national congress in Braunschweig. They're advocating for a basic inheritance of 60,000 euros for any German 18-year-old, regardless of their residency status. One delegate expressed the sentiment, "We need a consistent redistribution from top to bottom." Another chimed in, "Very few of those who are wealthy today have worked for it."
This idea involves an unconditional payment, devoid of earmarking, to eligible individuals. The funds would flow automatically, without the need for applications. The financial cost is substantial, estimated at around 45 billion euros each year, according to the Jusos. Nevertheless, they remain unperturbed, claiming that only 15% of the 400 billion euros currently distributed annually without a tax liability would need to be collected and redistributed through inheritance tax.
The plan to finance this ambitious initiative hinges on reforming the inheritance tax system. The Jusos are pushing for a tax rate of 10% on inheritances exceeding a tax-free amount of 1 million euros. Progressive tax rates of 20% and 30% for the subsequent million euros would follow. From the ninth million, a staggering 90% top tax rate would apply.
This proposal represents a significant shift in Germany's economic policy, emphasizing social justice and redistribution. By providing a financial safety net for young people, the Jusos aim to ensure they can start adult life without financial pressures and take advantage of opportunities in education and housing. Moreover, the proposal might be a stepping stone in a broader tax reform strategy, targeting wealth and inheritance taxes to emphasize equity.
