In order to reduce social inequality in Germany, the Federal Government Commissioner for East Germany, Carsten Schneider (SPD), proposes a so-called basic heritage. Support for plans for the state to provide young people with a certain sum when they come of age also came from the Left Party on Thursday. The FDP, on the other hand, rejected the proposal as a “classic redistribution idea”.
“Building property is no longer possible for a large part of the population, especially in the metropolises,” Schneider told the newspapers of the Funke media group. “A basic inheritance would be an interesting instrument to stop this development and to make the starting opportunities in working life a little fairer.”
The German Institute for Economic Research (DIW) had calculated that a basic state inheritance of up to 20,000 euros for all 18-year-olds and their financing through an inheritance or wealth tax would significantly reduce wealth inequality in Germany. The so-called Gini coefficient – the standard measure of inequality – would fall by five to seven percent, depending on how it is structured.
“I think that’s a very exciting idea,” said SPD politician Schneider. “Inequality is growing from generation to generation, which is less due to active income than to wealth growth. If you don’t have anything, it’s difficult to put aside something and build up wealth.”
For financing, Schneider advocated “a higher inheritance tax for the top ten percent”. In Germany, inheritances worth millions are taxed too little, he criticized. “We run the risk that a rentier society that lives off inheritances will decouple itself from normal working society.”
Left faction leader Dietmar Bartsch made a similar statement in the Funke newspapers. In his view, a basic inheritance could also “relieve the East-West divide, because assets and inheritances are significantly lower in the East.” Bartsch asked Schneider to commission Finance Minister Christian Lindner (FDP) with a basic inheritance bill.
FDP General Secretary Bijan Djir-Sarai rejected the plans. Schneider’s suggestion was “unproductive,” he told the Funke newspapers. “We need to concentrate on making it easier for everyone in our country to accumulate wealth and, for example, to buy a home.”