“That’s acceptable” – top economists want to abolish tax privileges for heirs

Leading economists are calling for comprehensive changes to inheritance tax. “A reform should significantly reduce tax rates, abolish exceptions for business assets and self-used real estate, and provide for deferral rules,” said Ifo President Clemens Fuest WELT AM SONNTAG. Fuest believes that the concerns expressed by business associations about excessive interference with the substance of companies are exaggerated. “A low-rate tax in the ten percent range, combined with generous deferral provisions, is sustainable,” he said.

Fuest wants to tax owner-occupied properties in the same way as rented ones. “People today usually inherit between the ages of 50 and 60, so their parents’ property no longer has the same importance as it used to,” he said. Tax exemption can only be justified for the spouse who already lives in the property. Currently, apartments of up to 200 square meters can be passed on tax-free to spouses and children if the heir moves in within six months and stays there for at least ten years.

Marcel Fratzscher, President of the German Institute for Economic Research (DIW), also believes that existing special rules in inheritance tax law are no longer up to date. “All exceptions to inheritance tax, especially for large assets, should be abolished and payments should be deferred in such a way that taxation of assets is prevented,” he told WELT AM SONNTAG. From Monday, the inheritance tax will be heard before the Federal Constitutional Court. Among other things, it is about whether company heirs are being given undue advantage.

Fuest sees the basic problem of the current inheritance tax law with its special rules in the unequal distribution of burdens. “Currently, medium-sized inheritances in particular are burdened with inheritance tax, while many large inheritances in the form of business assets are not burdened or only burdened slightly,” he said. Fratzscher wants to make greater use of assets overall for state revenue. “Assets and capital income should be taxed as broadly as possible, with a few exceptions and at moderate rates,” he said. Germany taxes labor unusually heavily and wealth unusually weakly.