In Austria and Germany, middle-class families pay significantly more taxes than millionaires and billionaires. This is the conclusion of a study published on Thursday by the German development organization Oxfam, the Tax Justice Network and the trade union Momentum Institute. They therefore argue for the introduction of a wealth tax. The example of Switzerland shows that taxing the super-rich works, according to the study authors.
In the country comparison between Germany, Austria and Switzerland, the effective taxation of average middle-class families, millionaires and exemplary billionaires was calculated – for example, in Austria, Red Bull heir Mark Mateschitz was used. It turns out that the progressive tax systems in all three countries ensure a strong balance in income distribution, but in international comparison wealth is distributed very unevenly.
Wealth taxes could create compensation
The wealth tax – as it exists in Switzerland – will of course not change that much, but according to the research it does ensure a balance in the effective tax burden. While the income of the middle class consists mainly of income from work, the income share for millionaires is only 10 to 20 percent and for the super-rich less than one percent.
According to the calculations, an average middle-class family with all taxes and contributions including employer contributions in Austria and Germany has an effective tax burden of 42 and 43 percent of the employer’s gross salary, respectively. In contrast, model millionaires in Austria pay only about 30 percent, in Germany 29 percent, and the model billionaires pay only about 26 percent in taxes.
Regional differences in Switzerland
By comparison, in Switzerland the exemplary super-rich have a tax rate of about 32 percent, the average millionaire has a tax rate of about 19 percent, and the middle-class family has a tax rate of about 15 percent. This would mean that the effective tax rates of the super-rich would be much closer to the targeted maximum tax rates. The regional differences in Switzerland are large. The study assumed that a middle-class family and millionaire lived in the low-tax canton of Zug, where the highest tax rate is 22 percent. The billionaire used actually lives in a canton with high taxes (top tax rate of 41.5 percent).
Also increase in corporate taxes
The authors argue that a wealth tax could ensure that the tax system becomes more progressive again and thus aligns with the agreed performance principle. If Germany were to increase wealth taxes at Swiss level, this would amount to an additional turnover of 73 billion euros. According to current models, a wealth tax in Austria would raise up to 5 billion euros annually. In addition to introducing a wealth tax on the super-rich, the study’s authors also recommend raising corporate taxes.
The research was based on data from the OeNB study ‘Household Finance and Consumption Survey (HFCS). In the case of the super-rich, due to a lack of concrete data, publicly available corporate registry data, reports from financial news agencies and the Trend and Forbes rich lists were used.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
