Germany has just had a new billionaire. Financier and TV celebrity Carsten Maschmeyer landed on Forbes billionaire list Thursday for the first time with an estimated net worth of $ 1.1 billion (â¬ 0.9 billion) “I myself am an example of how it is possible to reach the top under the most difficult circumstances. smaller and poorer, âhe told an April webinar. on how to get rich, referring to his childhood living with his mother who had a small income from secretarial work. “Being rich consists of many small steps and a ton of discipline and persistence.”
The ranks of millionaires and billionaires in Germany have indeed grown in recent years. The German Federal Statistical Office announced this week that the number of German taxpayers with annual income above $ 1 million increased from 1,900 to 24,700, citing the most recent figures from 2017.
Carsten Maschmeyer is married to famous German actress Veronica Ferres
When real estate, business capital, savings and investments are also factored in, the numbers jump: well over two million Germans have a net worth of $ 1 million according to the 2020 Global Wealth of Credit report Swiss. It also ranked Germany third in the world in terms of individuals worth $ 50 million or more. And according to the Forbes 2021 billionaire list, Germany is number four in the world for its billionaire population of 136.
The difference between the numbers based on income and wealth suggests to the adage “wealth breeds wealth”: those who tend to have more, or even more. Currently, the richest 10% in Germany own two-thirds of its assets.
As growing inequalities in Germany grab the headlines and politicians roll back financial reform plans ahead of September’s national elections, a question arises: Is Germany a “pro-rich” country, with policies that favor the concentration of wealth at the high end?
What is “rich”?
Maximilian Stockhausen, an income and wealth distribution economist at the German Economic Institute (Institut der Deutschen Wirtschaft, IW), says it is difficult to determine how ârichâ a country is because it is ârichâ. Is a relative term. Does that mean having 135 million euros in assets, including a 10-bedroom villa in Hamburg’s Blankenese district, a spacious holiday home in Mallorca and a yacht, like music mogul Dieter Bohlen? Or does it mean having a small independent business valued at a million that can pay the wages of one or two other employees, support a mortgage on a house, and an annual family ski vacation?
Most people underestimate what it takes to be considered “rich,” said Stockhausen, pointing to conservative politician and investment lobbyist Friedrich Merz, who sadly described himself as “upper middle class” with its 6-figure income.
“If you really have an income of a million, you belong to the upper class, to the richest people in terms of income in Germany, because the threshold at which you belong to the richest 10% in terms of income is less than a million, “Stockhausen said. . An individual earning â¬ 42,000 per year after tax lands in this top group.
Producer, songwriter and singer Dieter Bohlen is one of Germany’s most famous and controversial television personalities.
The current highest tax rate in Germany of 45% – known as the ‘tax rate for the rich’ (Reichensteuersatz) – applies to people who earn more than â¬ 250,000 a year – barely 108 000 people out of the 42 million German taxpayers. In comparison, the highest tax of 45% in neighboring France is significantly lower, at around â¬ 158,000.
Stefan Bach, research associate in public economics at the German Institute for Economic Research (DIW), pointed out that higher incomes can often bypass income tax. âThe super rich, the giant incomes, the corporations – the Klatten families, Quandt, Oetker, etc. – family businesses, they are not even included because their income is largely separated into business structures and therefore are not subject to progressive income tax, âhe told DW.
Susanne Klatten, nÃ©e Quandt, is a German billionaire heiress with an estimated net worth of over $ 25 billion, which ranks her as the richest woman in Germany.
In contrast, the average German employee also has a heavy burden of state benefits. According to a 2021 OECD report, single workers bear a higher average net tax burden in Germany than in any other OECD country – meaning that a German employee pockets the lowest percentage of the available salary.
The OECD has criticized this as contributing to wealth inequality because without disposable income it is difficult to save.
“The tax burden on low labor income is high, due to high social security contributions, while environmental and property taxation is low and inheritance tax exemptions and capital income contribute to high wealth inequality, “wrote the OECD in its 2020 Economic Survey of Germany. .
Gifts and inheritance are important ways of concentrating wealth. Germany has relatively generous policies, with a parent able to pass â¬ 400,000 tax-free to a child; in France, the amount is only 100,000 â¬.
Gloria, the Dowager Princess of Thurn and Taxis is a German socialite and businesswoman, and a well-known superrich member of the German nobility.
Of all the money bequeathed or donated, the DIW has found that half goes to the top 10%. âThe higher an individual’s income or wealth, the more likely that person will receive an inheritance or gift,â said Markus Grabka, head of DIW’s socio-economic panel, in an online interview. At the highest level, the Financial Times found last week that around 70% of the wealth of German billionaires is inherited.
Bach pointed out how very wealthy business families can also bequeath good fortune. âThe super rich with giant annual incomes, say 20 million and above, they pay no inheritance tax if they have business wealth that passes tax privileges,â he said. He calls the inheritance tax a “sandwich tax” because it weighs most heavily on those in the middle; the lower end has little or nothing to pass on, and the higher end can reduce its tax burden.
Nonetheless, some very wealthy Germans viewed the tax regulations as unfavorable enough to encourage them to move. Cologne-born multimillionaire entrepreneur and television celebrity Robert Geiss moved to Monaco in the mid-1990s to take advantage of the principality’s low taxes: no taxes on income, wealth or property, according to media reports. property, and – for the benefit of his two daughters – no inheritance rights for the direct beneficiaries.
Robert Geiss and his wife Carmen are best known for their ‘Die Geissens’ TV show in which they celebrate their luxurious lifestyle
Will Germany get a wealth tax?
In Germany, a possible new wealth tax is currently sparking heated debate ahead of September’s national elections, with left-wing German political parties calling for some form of reintroduction. While the country largely had a wealth tax since 1893, it hasn’t levied one since 1997, after Germany’s highest court ruled it unconstitutional.
The center-left Social Democrats called for a 1% tax focusing on the “very rich” and said they would also raise the top tax rate. The Green Party has called for a wealth tax for those who are “particularly wealthy” and for reform of inheritance taxes. More ambitious, the Socialist Left Party would like to see a wealth tax of 5% of individuals with at least 1 million euros in assets.
Chancellor Angela Merkel’s conservative Christian Democratic Union (CDU) and Christian Social Union (CSU) parties, as well as pro-business Free Democrats, are against its reintroduction, arguing it would cost too much or harm family businesses.
Boris Becker was a tennis star in the 1980s and has since grabbed less favorable headlines
Tax evasion, on the other hand, has become increasingly difficult in Germany over the past 15 years and is no longer an easy and lucrative option for the wealthy. Reports like those on former tennis champion Boris Becker scandalized the public: in the early 90s, he lived in Munich but claimed to reside in Monaco and therefore claimed that he was not subject to German taxes. He was subsequently found guilty of evading taxes to the tune of 1.7 million euros between 1991 and 1993 and sentenced to two years in prison and a fine of 500,000 euros.
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