Giving to the poor? – Red control model on the test bench

Andreas Babler plays Robin Hood in a red robe. Take from the rich, give to the poor. According to the SPÖ, millionaires’ and inheritance taxes should generate seven billion euros annually. Home ownership remains tax-free up to 1.5 million euros, as does one million euros in assets (see graph for examples). In addition, there are the necessary details, especially when it comes to inheritances and donations (25-50 percent), which, according to the SPÖ, would only affect a few percent. “The extra income could be used to eradicate child poverty or finance healthcare,” say Babler and his club boss Philip Kucher.

Here you can see an example calculation based on the SPÖ model.

An agreement with potential government partners seems difficult or impossible. But how should the Reds model be assessed overall? “Five billion in wealth taxes is completely unrealistic,” says Hanno Lorenz of the economically liberal Agenda Austria. “In France, which is seven times larger, the tax was introduced in 2012. That generated five billion a year.” After a strong capital flight, France largely abandoned wealth taxes in 2017 – like more and more countries. What was left was a property tax.

The SPÖ, supported by the Linz economist Jakob Kapeller, sticks to its ‘fairness principle’ and is not concerned about capital flight. One argument is that breaking up everything and filing a new tax return abroad is too complicated. Only in Luxembourg and Switzerland does wealth tax generate significant revenue, says economist Lorenz.

Relieve labor income
However, he admits that wealth, unlike income, is unevenly distributed in Austria. “Austria is a country of tenants. That is why there is a lack of wealth in the middle.” Many countries charge inheritance taxes – “but the income is manageable”. In fact, the SPÖ only expects a maximum of 800 million euros in its model.

If one really wanted to follow the OECD model, “relief in labor income would be necessary above all.” Everyone has been talking about this for years. The SPÖ wants that too. Lorenz: “In their model, only two billion would be earmarked for a reduction. This would reduce the burden on employees by two percent. So it’s almost nothing.”