Taxes on Property. Potential Options for Germany

Current estimates for Germany show that household wealth is high, increasing in the long run, and characterised by growing inequality. Against this background the study in a first step elaborates potential options to tax wealth and shows the significance for Germany also in an international comparison. Based on important criteria to evaluate individual options to strengthen taxes on property – revenue potential, extent of tax avoidance, incidence, potential problems of double taxation, and compliance costs – selected options to increase taxes on property in Germany are assessed: the re-introduction of a net wealth tax, a one-off capital levy, and the increase of the real estate tax and the inheritance and gift tax. Based on the evaluation criteria used in this study, (an increase of) the inheritance and gift tax appears as the relatively best option. Also the real estate tax lends itself as a well-suited option. A net wealth tax appears to be rather problematic, as well as a capital levy.