Inheritance Tax Fails to Fulfill Its Intended Purpose, Argues FAZ Commentary
The German inheritance tax, designed to curb the wealth of the super-rich and promote equal opportunities, is falling short of its goals, according to a critical commentary published in the Frankfurter Allgemeine Zeitung (FAZ) on January 20, 2026. The article, penned by economics editor Mark Fehr, suggests that rather than expanding the inheritance tax—particularly on business assets as proposed by the Social Democratic Party (SPD)—Germany would be better served by abolishing the so-called "end-of-life taxation" altogether.
Burdening While Sparing: The Paradox of Inheritance Taxation
Inheritance tax is levied on wealth accumulated during a lifetime, which is then transmitted to heirs. Fehr emphasizes that before this wealth—whether in cash or assets—can be passed on, it has already been subjected to income taxation, sometimes multiple times. In recognition of this, the current legislation features numerous exemptions and allowances aimed at softening the tax burden.
One of the most complex and controversial provisions in the inheritance tax law is paragraph 13a, which governs the rules for exempting business assets from taxation, provided the heirs maintain employment levels. This section, described as "one of the longest and most complicated" in the law, serves as a source of lucrative consulting fees for tax advisors but leaves many traditional family-run businesses struggling with recurrent tax liabilities across generations.
Ineffectiveness Against Super-Rich and Capital Mobility
While family businesses face challenges, the ultra-wealthy often bypass the tax through international wealth structuring. These individuals and entities frequently relocate their assets across low-tax jurisdictions, keeping megayachts flying flags from countries with lenient tax and labor laws. Consequently, the inheritance tax’s impact on reducing wealth concentration at the very top is minimal.
Fehr argues that a national inheritance tax cannot meaningfully counteract global capital mobility or address the international concentration of wealth, given the ease with which large fortunes can maneuver across borders.
Impact on Social Mobility and Alternative Measures
The commentary also disputes the notion that forcing heirs—particularly of family businesses—to sell parts of their inheritance in order to pay the tax improves the social mobility prospects of children from lower-income families. Instead, Fehr suggests that advancements in innovation and education are more effective means of enhancing equal opportunities.
To finance such social investments, alternative forms of taxation that induce fewer complications and economic distortions than inheritance tax should be considered.
Conclusion: Calls for Reform or Abolition
The FAZ article reflects a deep skepticism about the current and proposed inheritance tax policies. It challenges the SPD’s initiative to widen the tax’s scope on business assets, advocating instead for the outright abolition of inheritance tax as a constructive step forward.
By shedding light on the bureaucratic complexity, ineffective wealth re-distribution, and international loopholes, the article urges a critical reassessment of whether this longstanding taxation mechanism achieves its foundational aim of promoting fairness and social justice in Germany’s economy.
Mark Fehr is an economics editor at Frankfurter Allgemeine Zeitung. His commentary was published on January 20, 2026.