“More fairness” – Wealth tax experts from the National Bank

Rich people would benefit from the tax structure and subsidies, as well as crisis support and basic property protection, but at the same time would have better access to political decision-makers. “They can influence the legal framework in their favor much more easily than poor people and people in the middle of society,” say the study authors Pirmin Fessler and Martin Schürz. However, too much power through ‘excess wealth’ is harmful to democracy.

“Promote social justice”
Fessler and Schürz therefore argue for the introduction of taxes that promote social equality, contribute to the fight against climate change and have the potential to significantly reduce taxes on labor at the same time. They see empirical evidence for their demands in the OeNB study ‘Household Finance and Consumption Survey (HFCS).

Specifically, they demand the gradual introduction of a tax on land leases, once promoted by the liberal economist Milton Friedman as the ‘least bad tax’. The idea behind it: public goods such as infrastructure (such as a new metro station nearby) increase the value of land without landowners directly paying for them – a continuous ‘invisible redistribution from the have-nots to those who ‘have land’. This fuels social inequality because landowners can sell access to goods and services and keep the associated income. This money, in turn, is not available to finance public goods and services. Moreover, “privatized land leasing” also leads to high land consumption due to inefficient use of land, the study found.

According to the OeNB, the property tax is too low
There has been a property tax in Austria since the 1950s. However, because the standard values ​​with which the properties are assessed are far too low, this yields relatively little, according to the research. The authors calculate that a 100 square meter apartment in the center of Vienna worth hundreds of thousands of euros would have to pay a property tax of only 50 euros per year, while a single-family house in the country with 1,500 square meters of land would pay a property tax of only 50 euros. per year would yield. would pay 40 euros, the authors calculate. The areas used for agriculture or forestry amount to several euros per hectare. When purchasing land, a transfer tax of 3.5 percent is due, but when purchasing large land this is often avoided through business construction.

According to the study’s authors, taxing land rent (only on the value of the property, not on the buildings on it) would mean that, in addition to property owners, the general public would also receive a share of the value that is won by public infrastructure. . Furthermore, this would make land cheaper, allowing more people to buy property, the authors promote the model – even if land valuation is relatively complex depending on location.

“Fighting excessive concentration of wealth”
According to the authors, the reintroduction of the inheritance and gift tax, which was abolished in 2008, is intended to strengthen social mobility and equal opportunities “by taxing unearned, unprofitable income from inheritances and thus countering excessive concentration of wealth to go.” Accordingly, they also reject tax exemptions for inheriting companies, because that would mean that mainly the richest people receive preferential tax treatment. According to the authors, a progressively designed tax, in which small inheritances are subject to very low taxes and large inheritances are high, would generate several billion euros per year for the state, which could flow specifically to educational institutions and healthcare institutions. or measures against poverty.

A net wealth tax is intended to prevent excessive concentration of wealth and power and to ensure greater transparency and fairness in the area of ​​wealth. In Austria there was already a wealth tax from 1955 to 1993. However, due to the anonymity of bank accounts at the time and the valuation of real estate based on outdated standard values, she only recorded part of the assets. Including exceptions and low tax rates, the tax at the time was only about one percent of tax revenue. For their model, Fessler and Schürz now propose a high tax exemption of 50 million euros to “limit the tax to extremely wealthy people and thus combat the antidemocratic effect of billion-dollar assets.” If well designed, the tax could also bring greater transparency to financial conditions and make tax evasion and tax avoidance more difficult.