Does wealth tax help?

Families pay more tax than the super-rich

Families in Austria bear a higher tax burden than the super-rich.

(Bild: ©Looker_Studio - stock.adobe.com)

In Austria and Germany, middle-class families pay significantly more tax 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-affiliated Momentum Institute. They are therefore calling for the introduction of a wealth tax. According to the authors of the study, the example of Switzerland shows that taxing the super-rich works.

In the country comparison between Germany, Austria and Switzerland, the effective taxation of average middle-class families, millionaires and exemplary billionaires was calculated - in Austria, for example, Red Bull heir Mark Mateschitz was used. This shows that the progressive tax systems in all three countries ensure a strong balance in income distribution, but that wealth is distributed very unevenly in an international comparison.

Wealth tax could create equality
The wealth tax - as it exists in Switzerland - obviously does not change this much, but according to the study, it does equalize the effective tax burden. While the income of the middle class consists mainly of earned income, the share of income for millionaires is only 10 to 20 percent and less than one percent for the super-rich.

(Bild: APA/HANS KLAUS TECHT)

According to the calculations, an average middle-class family with all taxes and levies including employer contributions in Austria and Germany has an effective tax burden of 42% and 43% of the employer's gross salary respectively. In contrast, model millionaires in Austria only pay around 30 percent, in Germany 29 percent and the example billionaires only around 26 percent in taxes.

Regional differences in Switzerland
By comparison, in Switzerland the exemplary super-rich person pays a tax rate of around 32 percent, the average millionaire 19 percent and the middle-class family around 15 percent. This means that the effective tax rates of the super-rich would be significantly closer to the maximum tax rates envisaged in each case. The regional differences in Switzerland are considerable. The study assumes that the middle-class family and millionaire live in the low-tax canton of Zug, where the maximum tax rate is 22%. However, the billionaire used in the study actually lives in a high-tax canton (41.5% maximum tax rate).

Also an increase in corporate tax
The authors argue that a wealth tax could therefore ensure that the tax system becomes more progressive again and thus corresponds to the agreed performance principle. If Germany were to levy wealth taxes at the Swiss level, this would correspond to additional revenue of 73 billion euros. According to current models, a wealth tax in Austria would generate up to 5 billion euros annually. In addition to the introduction of a wealth tax for the super-rich, the authors of the study also recommend an increase in corporate taxes.

The study was based on data from the OeNB's Household Finance and Consumption Survey (HFCS). In the case of the super-rich, publicly accessible company register data, reports from financial news agencies and the rich lists from Trend and Forbes were used due to a lack of concrete data.

Agenda Austria against wealth tax
The liberal economic think tank Agenda Austria does not believe in the demand for a wealth tax. The classic wealth tax is hostile to the economy and is therefore on the retreat everywhere, explained Agenda Austria boss Franz Schellhorn in a statement: "If you want more justice, you have to lower taxes and not raise them, this is the only way to build up wealth on a broad basis." The spending brake, on the other hand, could be copied from Switzerland.