Start bonus for young people in Germany: Experts noted that the wealth of German citizens is unevenly distributed. To change this, economists proposed a revolutionary solution: young people would receive capital from the state ”to start”. The funds would come from higher property taxes, reports Spiegel.
Some people inherit much while others end up inheriting nothing. The German Institute for Economic Research (DIW) drew attention to the problem of property inequality and came up with an idea to solve it. According to DIW, all 18-year-olds should receive up to 20,000 euro “to start”.
Start bonus for young people in Germany. Project assumptions
According to research published by the Reuters news agency, the project could significantly reduce wealth inequality in Germany. “ If we really want to ensure prosperity for all citizens in the future, then we should reduce the high wealth inequalities in Germany through redistribution. Providing basic capital to people without wealth and financing it from high wealth taxes would allow building wealth, ”said DIW tax expert Stefan Bach.
The SPD, Greens and FDP coalition agreement provides for wealth-building support measures – such as promoting home ownership, improving company and private pension systems, and increasing income tax lump sums. “ This is a step in the right direction, but it is likely to reduce these already enormous wealth inequalities only moderately. We will also have to wait for the effects, ”said Bach. In his opinion, the best solution to this problem is the already mentioned “start-up” capital project.
The expert listed its assumptions:
- all 18-year-olds would receive a start-up capital of EUR 20,000 from the state
- the money can only be used for education and training, buying a home, self-employment or starting a business
- the amount would not be paid in cash
- the project would reduce the Gini coefficient, recognised worldwide as the standard measure of inequality, by five to seven percent
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With start-up capital of EUR 20,000 for every 18-year-old, the project would cost around EUR 15 billion a year.In addition to taxes on high wealth, economists have also found other sources of financing : raising property taxes and reforming inheritance taxes.