Plans in check

The five biggest myths about wealth tax

(Bild: Krone KREATIV/APA/Hans Klaus Techt, Krone KREATIV)

The Social Democrats want to make the rich pay more. But the plans barely stand up to the "Krone" check. Will it really only affect the super-rich? How many billions will it raise? And do the rich really pay no taxes in this country? 

Numerous user comments, surveys and letters to the editor show: People are against new taxes and want a more economical and efficient state. "It can't be down to the revenue," writes one krone.at user. Nevertheless, politicians are usually inventive when it comes to finding new revenue. The "Krone" looked at the five biggest misconceptions surrounding wealth tax.

Mythos 1

„Die Vermögenssteuer trifft nur Superreiche!“

If a wealth tax is really to bring in significant revenue, it will also have to affect the middle class. Simply taxing the super-rich would neither relieve the state budget nor would it combat and redistribute structural wealth inequalities, emphasizes IHS head and top economist Holger Bonin in an interview with "Krone". "It's not about the 30 to 40 billionaires." What's more, while the super-rich can move their assets more easily, people from the middle class find it difficult to move capital - the majority of their assets are in real estate, which is immovable. "The super-rich would certainly not be the ones to pay this tax," says Bonin.

Economist IHS boss Holger Bonin: "The super-rich will certainly not bear this tax."

(Bild: SEPA/SEPA.Media | Martin Juen)

Mythos 2

„Die Steuer bringt 5 bis 6 Milliarden Euro“

Advocates of a wealth tax are overflowing with generous estimates. The fact is: five to six billion euros is too high. IHS head Holger Bonin also emphasizes this: "Five billion would be around one percent of GDP. That is the absolute upper limit, but almost no country reaches it." It is worth taking a look abroad: France had a wealth tax until a few years ago. At that time, it brought in five billion euros. However, France has seven times the GDP and eight times the population of Austria. France has a millionaire share of 5.6 percent, Austria has 3.7 percent.

France's model should have generated many times the tax revenue planned in Austria. Not to mention the administrative costs. "An annual assessment of assets is necessary. It is estimated that 20 percent of the revenue from a wealth tax is spent on administration."

Mythos 3

„Die Vermögenssteuer entlastet Arbeitnehmer“

Proponents argue that it is only possible to reduce the burden on labor and redistribute wealth if the rich are taxed more heavily at the same time. However, this implies that Austria has a revenue problem that needs to be solved with new taxes. However, the opposite is the case: there is a problem with expenditure. In addition, Babler and co. state what they want to finance with the tax revenue. Care workers, basic child protection, higher unemployment benefits, free public transport or a reduction in VAT. Whenever money is lacking somewhere, the call for a tax on the rich always follows. However, like any revenue, this can only be spent once and cannot be used to finance several things at the same time.

SPÖ leader Andreas Babler is focusing heavily on the issue of taxes in the election campaign.

(Bild: APA/ROLAND SCHLAGER)

"You get the impression that the money has already been spent five times over. A wealth tax is certainly not enough to solve all our problems," says Bonin. Broader taxation is also necessary to have a distributive effect. If only the top few percent of the richest are taxed, it is not possible to effectively redistribute wealth. "If I take away a billion from a multi-billionaire, I won't have much less inequality," says Bonin. It also depends very much on what happens to the money. Fleecing the rich doesn't change injustice per se. It depends on how it is used.

Mythos 4

„2% weniger Vermögen tun niemandem weh“

The millions and billions of the rich are not always available in current accounts or savings accounts, but are invested in assets. To a large extent, these are also business assets. Bonin gives an example: "If an asset has a yield of four percent and I tax the entire asset at two percent, half of the yield is lost. That would be like a 50 percent capital gains tax, so to speak."

In this respect, such an asset tax is also "poison" for new investments and harmful for the location. And especially in the current situation, where many companies are in the red, a wealth tax would be a burden on top of everything else, which would ultimately even eat away at business assets. After all, which profits should be used to pay the taxes?

Mythos 5

„Reiche zahlen sowieso kaum Steuern“

The top 20 percent of income earners pay almost 80 percent of taxes. And the tax authorities also make a good profit from profit distributions: First with corporation tax (23 percent) and then with capital gains tax (27.5 percent) in the event of a distribution, meaning the state grabs around 44 percent.

It is true that the substance of assets is taxed less in Austria than in other countries. However, this does not mean that wealth taxes are on the agenda in Europe. Only Norway, Spain and Switzerland have a tax on net wealth. The reason is rather that the only real property tax here is the land tax, which has been calculated using the same standard values since the 1970s. Elsewhere, however, taxes on real estate are higher. However, it is also easier to accumulate wealth there over the years. This is because high taxes on work do not hinder the accumulation of wealth as much as in Austria.