ifo survey among economists: economists for higher wealth tax

It is controversial whether very wealthy people should be taxed more heavily in Germany. According to a survey by the Munich ifo Institute, the majority of economists are in favor of a tax increase for top earners.

The majority of economists in Germany are in favor of a higher tax rate for very high incomes. Around 56 percent welcome an increase in the tax on the wealthy on annual incomes of 278,000 euros or more. This is the result of a survey conducted by the Munich ifo Institute among 153 experts.

In contrast, 52 percent of respondents are against raising the top tax rate. 46 percent of the economists surveyed by the ifo Institute are in favor of this. “Contrary to what the name suggests, an increase in the top tax rate would not only affect those earning very high incomes, but would also put a particular strain on the middle class,” says Ifo researcher Marcel Hauler.

Fairness of burden sharing in the crisis

The top tax rate of 42 percent applies in 2022 from a taxable annual income of more than 59,000 euros. From an income of 278,000 euros, the highest income tax rate of 45 percent (the “wealthy tax”) applies. The so-called “economic wise men” had also proposed temporary tax increases for top earners in their annual report.

In the ifo survey of economists, 76 percent supported the Inflation Compensation Act recently passed by the Bundestag and Bundesrat, which provides for compensation for so-called “cold progression” to relieve taxpayers. The term describes the effect that someone slips into a higher tax rate through a wage increase that at most compensates for the inflation rate without their real income increasing. For this reason, the German tax rate is being changed in such a way that higher tax rates apply to higher taxable income.

“Consolidation urgently needed”

“Public budgets are groaning under the additional spending in recent years,” said ifo expert Hauler. “Consolidation is urgently needed.” The experts also have an opinion on this: 52 percent of the economists surveyed advocate a reduction in public spending. On the other hand, 43 percent are in favor of tax increases.

The suspension of the debt brake received a similarly high level of approval at 37 percent. Only six percent are in favor of further extra budgets from Federal Finance Minister Christian Lindner.