taz: Mr. Buggeln, have you inherited anything?
Marc Buggeln: No.
taz: Will you inherit anything?
Bugging: Yes, half a little house.
taz: Will inheritance tax be due?
Bugging: No, that will be well below the limits.
taz: Is inheritance tax organized fairly in Germany?
Bugging: No. Those who inherit a lot often don’t have to pay anything at all. Anyone who inherits a house in Munich pays 8 to 15 percent inheritance tax. Anyone who inherits a real estate company with 300 houses pays nothing. That’s unfair.
taz: The Union wants such corporations to continue to be able to be inherited tax-free. If inheritance tax were to apply, jobs would be lost.
Bugging: That’s not convincing. The SPD suggeststo spread the applicable tax over 20 years. If an inheritance tax of 30 percent of the company’s value were to apply, that would mean that the company would have to pay 1.5 percent inheritance tax for 20 years. For most companies this is possible via the return.
taz: A higher inheritance tax could cause entrepreneurs to move abroad. The CDU financial politician Mathias Middelberg even fears an “exit” for medium-sized companies.
Bugging: That’s not particularly convincing either. A real estate company can only move abroad to a limited extent. This applies to many companies. Talking about the exit of the middle class is, above all, propaganda.
taz: The economy is in crisis. Jobs are being cut. Don’t we have to do everything we can to ensure that companies invest here and make profits?
Bugging: In crisis sectors such as the auto industry, the state has to think about help. But: There are around 3,000 families in Germany who have assets of over 100 million euros. These large companies have organized themselves into the Family Business Foundation – that sounds better than a corporation. Most of these large companies are doing very well. According to SPD plans, they could pay an inheritance tax from the dividends that they have paid out generously in recent years. The fact that the family business owners still paint their bankruptcy on the wall is the usual means of protecting their considerable assets.
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taz: Companies say: We have already paid capital gains, income or corporation tax. Inheritance tax is double taxation. Is there something to that?
Bugging: No. Inheritance tax is paid by descendants who have not yet paid taxes. There can be no question of double taxation of one person.
taz: Conservative economists like Clemens Fuest advocate a uniform inheritance tax of 8 percent. Better 8 of x than 30 percent of nothing?
Bugging: Something is better than nothing. But I prefer the SPD model with progressive taxes. There is growing wealth inequality that can only be addressed with a progressive system. We effectively no longer have a progressive tax system. Gabriel Zucman, the EU tax coordinator, recently showed that the low-income population up to the upper middle class pay around 35 to 45 percent in taxes – but the super-rich only pay 20 to 25 percent. This turns the idea of progressive taxes on its head. This has been proven by new studies for the USA, France and Sweden. The numbers are likely to be similar for Germany.
taz: What can you do about it?
Bugging: Zucman has developed an interesting control concept to correct this imbalance. Accordingly, from assets of 100 million, two percent wealth tax is due per year. Companies can deduct income or corporation tax from this. If you pay more anyway, no wealth tax is due, otherwise the difference is due. This does not affect the middle class, who generally pay taxes, but only the super-rich, who avoid income tax through holding companies and inheritance tax through foundations. Many super-rich and large companies only pay corporate tax of 15 percent. And therefore a lower percentage than poorer people. This is not only unfair, it also endangers democracy.
taz: Why?
Bugging: Because growing wealth means growing power. In the USA this is abundantly clear. In Germany, too, the elite has prevailed in economic matters over the last two decades.
taz: For example?
Bugging: The top tax rate has fallen, inheritance tax has fallen and corporate tax will soon be reduced. For this purpose, the VAT, which affects poorer people more heavily, was increased.
taz: And that threatens democracy? Sweden is more unequal than Germany and is still a democracy.
Bugging: As a historian, I primarily look backwards. Great fortunes have grown, schools are falling into disrepair, the state is retreating, and promises of advancement have been broken. These appear to be the conditions for the rise of right-wing populist parties.
taz: Are progressive taxes typical of democracies?
Bugging: The tendency is yes. Feudal Europe had a regressive tax system until the end of the 19th century. Researchers say this tax system contributed significantly to the persistent rise in inequality from the 14th to the 19th centuries. This changed in the 20th century when progressive taxes on inheritance, income and wealth were introduced. The tax rates were initially very low, but from 1914 onwards during the First World War they rose rapidly to 77 percent in the USA and 50 percent in Great Britain. The rich financed the war in these democracies. This also happened in World War II.
taz: What was it like in Germany?
Bugging: Finance Minister Matthias Erzberger, a centrist politician, implemented a reform with high progressive taxes in the Weimar Republic in 1919. A more progressive, redistributive tax system is typical of democracies. And things go in the other direction again when there is a change towards dictatorship, like after the coup in Chile in 1973, when the Pinochet regime reduced taxes towards a flat tax.
taz: Tax cuts for the rich also exist in democracies.
Bugging: That’s correct. As part of the neoliberal transition, Ronald Reagan in the USA and Margaret Thatcher in Great Britain radically reduced wealth and top tax rates in the 1980s. The red-green government followed suit in the noughties.
taz: Can we learn from history when it is possible to introduce a fairer tax system?
Bugging: In fact, this was often possible in wars in which states needed a lot of money. Or in deep economic crises. Tax reforms that burden the elites only occur when it is clear that things cannot continue as they are; and when there is a broadly shared social consensus that high levels of social inequality are detrimental. Major reforms in normal political operations are rather rare.
taz: Have tax increases for the rich ever been implemented in Germany against the will of the conservatives?
Bugging: Only in 1919 with the Erzberger reform. In the 1970s, the social-liberal coalition slightly increased inheritance tax. Without massive resistance from the conservatives. The increase in inheritance tax was also in the election program of the CDU/CSU in 1972.
taz: Was the increase in inheritance tax in 1974 actually the last tax increase for the elite in Germany?
Bugging: This is the case with regard to inheritance tax. In 2005, the rich tax was introduced in income tax, i.e. an increase in the top income tax rate from 42 to 45 percent. However, since VAT was raised by three percentage points at the same time, the overall effect of the reform was regressive.
taz: In 2026, will Germany be on the way back to the 19th century in terms of wealth distribution?
Bugging: The USA has actually returned to the 19th century when it comes to wealth and income inequality. Elon Musk is the new Rockefeller. When it comes to income inequality, Germany is a long way from the 19th century. However, wealth inequality has increased in recent decades.
taz: Why is it so difficult to tax wealth in Germany?
Bugging: A progressive income tax was introduced relatively early in Prussia and Saxony. The aristocratic landowners there were in favor of income tax, because it was mainly paid by the bourgeoisie. However, the nobility fought the inheritance tax. They were able to easily hide their income on their agricultural properties, but the property, the land, can be measured and taxed. Until 1919, the nobility ensured that there was no inheritance tax for wives and children and that the dynasty was not endangered. The Erzberger reform changed that in 1919, but from 1924 onwards a bourgeois coalition government radically reduced inheritance tax rates for children and close relatives again.
taz: And with the Nazis? Didn’t they need money for the war?
Bugging: The Nazis increase taxes because of the war, but not inheritance and wealth taxes. There was even a Lex Krupp. As death approached, Hitler personally ensured that no inheritance tax was due when the company was transferred from the owners to his son. In 1945, the Allies set the German inheritance tax to the level in Great Britain and the USA, which was much, much higher and also applied to wives and children. But – as soon as the Federal Republic became independent again, inheritance taxes were radically reduced again.
taz: Why?
Bugging: The nobility had little influence after 1945. And yet the family and the dynastic principle are much more important in Germany than in the USA. The consensus there is that the next generation should achieve a lot themselves. If she inherits an asset, it should be taxed. Not with us. In Germany, the nobility principle has survived, although the nobility now plays only a minor role in large fortunes.