The wealth gap between East and West Germany remains significant: western states account for 95% of inherited wealth. Authorities propose using inheritance tax to reduce this inequality. Ahead of German Unity Day, the Commissioner for Eastern Germany, Elisabeth Kaiser, made a new attempt on Wednesday, September 30, to smooth out the sharp disparities in wealth levels in the country. The Social Democratic politician advocated for increasing revenues from inheritance tax and redistributing them in favor of the eastern federal states. Equalizing wealth is intended to improve opportunities for social mobility and change political sentiments in East Germany. "It’s about how people in our country can move forward regardless of their background," Kaiser said at the presentation of the annual report. Germany has achieved colossal results over the past 36 years, but it is still capable of more effectively realizing the promise of equal starting opportunities, she emphasized. The social lift should not depend on "how much parents earn, what a person inherits, or who they know," the politician added. A central part of the report was a survey of about 2,760 people across the country for the representative "Monitoring Germany." According to the results presented by Jena political scientist Marion Reiser, 95 percent of respondents believe that personal achievements and hard work should be the main conditions for social mobility. In reality, 80 percent cite wealth as the decisive factor, the same number consider connections to be determining, and 72 percent highlight social background. ## ## The Gap Between Ideal and Reality Only 69 percent of respondents mention achievements and hard work as truly important factors. According to Kaiser, such a gap between ideal and reality is fatal for society. If people do not believe in the return on their own efforts, they may not even try to achieve anything, the commissioner explained. This is where the uneven distribution of wealth between regions comes into play. The average total net wealth per household in eastern Germany was €125,500 in 2023, while in western Germany it was €257,100, Kaiser calculated. In terms of real estate, these figures were €97,800 versus €214,500, respectively. According to new data, 95 percent of the total value of property transfers subject to inheritance or gift tax is accounted for by western federal states, and only 5 percent by eastern states, which account for 19 percent of the country's population. ## ## Financial Equalization and Obstacles Kaiser proposes redirecting funds to eastern states through an equalization mechanism. She pointed to investments from a special infrastructure fund, early pensions, and a start-up opportunities program for schools, but emphasized that more efforts are needed to fulfill the promise of social mobility. With higher revenues from inheritance tax, there would be more freedom for investments, she noted. Inheritance tax falls under the jurisdiction of the states, and implementing the financial equalization mechanism using these revenues would require amending the Basic Law. Whether these ideas can be realized with the conservative bloc remains an open question. Kaiser sees her chance in the expected decision from the Federal Constitutional Court, which will require new regulation. Another area of equalization should be a "basic inheritance" - a one-time state payment of €20,000 to all 18-year-olds as start-up capital. This measure, funded through tax redistribution, was previously advocated by Kaiser’s predecessor Carsten Schneider. ## ## Underrepresentation In her report, the commissioner also noted the underrepresentation of eastern Germans in the leadership of federal ministries. Although this figure has increased from 13.9 to 16.3 percent since 2022, it still lags behind the share of people from East Germany in the overall population. "The higher the level of leadership, the lower the actual share of eastern Germans," Kaiser stated. According to her, this leads to the experience and perspectives of many citizens not being taken into account when making important decisions. She recalled the turning point of the state elections in Mecklenburg-Vorpommern and Saxony-Anhalt, where politician Ulrich Siegmund from the far-right party Alternative for Germany (AfD) hopes to take the position of state prime minister. According to the commissioner, the issue of opportunities for social mobility and expectations for the future is central to restoring political trust.
