Party Die Linke has proposed a progressive wealth tax that could raise substantial new revenue. According to a study released on Friday by the German Institute for Economic Research (DIW), a tax rate ranging from 1 % to 5 % on wealth exceeding €50 million could generate up to €147 billion per year. The proposal sets a personal exemption of €1 million, while business assets up to €5 million would remain tax‑free.
The study finds that the tax would hit almost exclusively the very top of the wealth distribution. The richest 0.1 %-those with wealth starting at €13.8 million-would contribute 91 % of the revenue, and the richest 0.01 %-with wealth beginning at €76 million-would account for 72 % of the tax base. Researchers argue that this would noticeably reduce wealth inequality.
However, possible adjustments such as tax planning and reduced investment could cut the expected revenue sharply. If the tax base is highly elastic, additional revenue could drop by up to 60 %. Consequently, the study recommends that the wealth tax be introduced gradually and in coordination with international partners, in order to mitigate adverse effects on investment flows and the country’s attractiveness as a business location.