Inequality of wealth in germany

Wealth for all - but how?

Can higher taxes or a starting capital for all 20-year-olds help to distribute wealth more fairly in the country? For the first time, an interactive simulator provides concrete answers. The results are surprising and bring new momentum to a stalled debate.

Pictures Bambina
November 09, 2023
17 percent of people in Germany believe in distributive justice

Wealth in Germany is unevenly distributed: While the richest ten percent of the population own around 60 percent of the country's wealth, the poorer half together only own around 1 percent. A majority of the population already feels that this distribution is unfair. And the concentration of wealth is set to increase further in the coming years if no political countermeasures are taken. But which instruments will bring about real redistribution is highly controversial and has not yet been adequately calculated.

With a new interactive simulator from our partner Forum New Economy, it is now possible for the first time to calculate in concrete terms how various measures could affect the distribution of wealth in Germany. It examines, for example, how a starting capital for 20-year-olds or a wealth or inheritance tax could reduce inequality.

“The question of which measures are appropriate to reduce wealth inequality is not easy to answer, even for policymakers. The Wealth Simulator now provides initial answers and thus new material for the stalled debate.”

Quote fromEllen Ehmke, Senior Expert Inequality, Robert Bosch Stiftung

A basic inheritance can stop the trend

According to the simulation, it would have the greatest impact on the distribution of wealth if every 20-year-old were paid a starting capital as a basic inheritance. The money could only be used for certain purposes such as retirement provision or education. From a payout of 20,000 euros each, the share of the poorer half of the population in total wealth would already be noticeably higher after ten years than would be the case without the payout.

Wealth tax is a weak adjusting screw

According to the simulator, a wealth tax would generate additional government revenue. However, a tax rate of one or two percent would not noticeably slow down the increasing inequality over ten years. This does not change the proportion of the poorer half of the population.

An increase in inheritance tax under current law would have no noticeable effect on the actual distribution of wealth across the entire range of possible tax rates. One of the reasons given by the researchers is that only 30 percent of Germans ever receive an inheritance or gift in the course of their lives.

"Taking something away from a few people's inheritance later in life does little to reduce wealth inequality," said scientist Charlotte Bartels at the launch of the calculator in Berlin on November 10. "Precisely because wealth is so highly concentrated in Germany, inequality can only be noticeably reduced if those who have nothing are massively helped to build up their wealth," she said.

The Wealth Simulator

Visite the Wealth Simulator

The simulator was developed by a group of scientists led by Timm Bönke and Charlotte Bartels from DIW Berlin together with the Forum New Economy and funded by the Robert Bosch Stiftung. The calculator is based on data from the Socio-Economic Panel at DIW Berlin and can be used via a website.

Visite the Wealth Simulator
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