Economic Challenges: Inheritance tax before the Constitutional Court: How much protection can the business assets tolerate?

In this episode of Economic Challenges, Handelsblatt chief economist Bert Rürup and Michael Hüther, director of the German Economic Institute, discuss inheritance tax reform. The Federal Constitutional Court heard two cases on this issue this week.

Rürup advocates the principle of income tax: low tax rates, broad assessment base. He criticizes the fact that private assets can be transferred to partnerships. If the reform ignores this imbalance, he fears a revival of the wealth tax.

Hüther believes that the protection of company assets is justifiable. Anyone who inherits a company also assumes responsibility, so the performance differs from that of private assets. The relocation argument “does not become more correct through repetition.” Inheritances also made the distribution of wealth more equal: “The drama that is always added cannot actually be seen in the data.” He rejects a flat rate.

The central question is whether the court confirms its line from 2014. Hüther sees no signs of a change of course. Rürup expects a verdict that goes in a different direction.