Government officials have dismissed proposals to increase inheritance tax, particularly concerning the transfer of businesses. Thorsten Frei, Head of the Chancellery and a member of the Christian Democratic Union (CDU), stated in an interview with “Welt am Sonntag” that the tax is “highly complex” and that substantial private assets are already subject to taxation.
Frei expressed concern that increasing the inheritance tax would create challenges during generational transitions within family-owned businesses. He warned such a measure could often force sales, potentially leading to the relocation of expertise and jobs – for example, an investor moving operations to a different region.
The official emphasized that capital diverted through taxation is crucial for fostering innovation and maintaining competitiveness. He noted that inheritance tax is inherently a structural policy tool, referencing the failure of previous regulations to pass constitutional review in Karlsruhe.
Frei cautioned that speculation regarding changes to the tax creates uncertainty, which businesses need to avoid. He suggested that promoting wealth creation is a more effective approach towards reducing wealth inequality and pointed to the government’s early retirement scheme as an example of this strategy.