SPD Inheritance Tax Proposal Sparks Sharp Criticism from CDU/CSU

The Social Democratic Party (SPD) has introduced a new proposal to reform inheritance tax in Germany, prompting immediate and strong opposition from the Christian Democratic Union (CDU/CSU). The SPD's plan focuses on increasing the tax rate for recipients of large inheritances while offering higher exemptions for most heirs and businesses.

According to the SPD's concept presented in the Bundestag, individuals inheriting significant wealth would face higher taxation. However, the majority of heirs would benefit from a substantial increase in tax-free allowances. Specifically, the SPD recommends a personal exemption threshold of approximately one million euros for each heir. For business inheritances, a new exemption of five million euros is suggested.

The CDU/CSU has voiced strong objections to these proposed changes, particularly from representatives of the party's business wing. Critics argue that the SPD's plan could place an undue burden on family-owned businesses, which form a critical component of Germany's economy. They contend that, after several years of economic stagnation, the focus should be on tax reductions rather than increases to support recovery and sustain employment.

SPD officials defend the proposal by highlighting current disparities in the taxation of inherited assets. They point to data indicating that while annual inheritances in Germany total between 300 and 400 billion euros, only about 9.2 billion euros are currently subject to taxation. The SPD maintains that its plan aims to promote greater fairness and equal opportunities, arguing that the proposed reforms would shift the burden toward those inheriting substantial wealth while protecting most families and businesses from additional taxes.

Financial experts within the SPD emphasize that, under the new scheme, many individuals and enterprises would see no increase in their tax obligations. They assert that the reform is designed to maintain economic viability for family businesses by providing considerable exemptions, thereby safeguarding jobs and investment.

The debate unfolds amid anticipation of a significant ruling by the Federal Constitutional Court in Karlsruhe. The court is set to determine whether current preferential tax treatment for business transfers violates the constitutional principle of equality. The SPD argues that its proposal is a proactive step to address potential legal challenges and ensure the inheritance tax system complies with constitutional requirements.

The discussion around inheritance tax reform has broader implications for Germany's economic and social policy. Proponents see it as an opportunity to address wealth concentration and enhance social mobility, while opponents warn of the possible negative impact on the country's vital mid-sized enterprises. As the debate continues, the future of Germany's inheritance tax system remains uncertain, with both major parties standing firm on their respective positions.