Is socialism the redistribution of wealth

"Why don't we see a lot more redistribution in democracies?"


Read on one side

TIME: Is it then desirable to tax the rich in the Alps more heavily?

Scouring: Politicians have to decide whether it is desirable, it would be possible. From research we can say pretty precisely to what point the state can increase taxes before citizens change their behavior so much - for example, move away or work less - that tax revenues shrink instead of increasing.

TIME: And where is this point?

Scouring: It tips around at an income tax rate of 50 percent. Overall, the burden of social and consumer taxes should not exceed 60 percent. So we could raise taxes for the upper income brackets in most countries without any loss of income.

TIME: Why doesn't that happen, why aren't the bottom 99 percent in favor of burdening the top 1 percent more?

Scouring: That is the big riddle: Why don't we see much more redistribution or even expropriation of the rich in democracies? That would always be in the interests of the majority. One answer is that the middle class believes that their children can get rich. And many recognize that others suffer if you take too much away from the rich, because jobs could then be lost, for example. The best partner from the perspective of the rich is the middle class. Therefore, a lot is done for their prosperity, their wealth accumulation is subsidized by the state, most recently in Germany with the home ownership subsidy. It has been going on for a long time. Bismarck introduced social security in 1883 to attract the middle class to his side and to slow down the then strong socialists and their radical redistribution plans. This is how it works to this day: redistribution from the rich to the middle class rather than to the very poor.

TIME: Why is it so difficult to really only catch the super-rich for tax purposes without the middle class feeling affected too?

Scouring: That's okay, for example with inheritance tax, which most countries have ...

TIME: ... but Austria no longer really ...

Scouring: ... and the one in Switzerland has been hollowed out, yes. Inheritance tax should be much more popular. On the one hand, because it does not aim at income, but rather at wealth, where inequality has increased more drastically. Above all, a well-made and high inheritance tax would be an insurance against the greatest economic risk in life: which family you are born into.

TIME: Then why is it unpopular?

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Scouring: I can only explain it psychologically: someone in the family died, and then the state comes and wants money - that's how many feel. They see less of the compensatory effect on the next generation, but rather the price that the previous generation pays. In addition, there is concern about the home or the family business, which are threatened by inheritance tax and for which there are exceptions. In the end, inheritance tax, if it exists, has become a voluntary tax in many countries that can be avoided, especially if death does not take you completely by surprise. In Switzerland there is at least one wealth tax that works in a similar way.

TIME: What do you think how it will go on? In the post-war period, taxes were higher than they are now. The US had rates of more than 80 percent until the 1980s. In the past few decades the rich have been eased and inequality has increased. Is the turning point coming now?

Scouring: A new era is now beginning. The corona shock will last for a long time, and the pressure on states to raise more money will increase. EU, OECD, the International Monetary Fund: all of them are trying to at least make tax avoidance more difficult. The political climate has changed, and many see growing inequality as a major problem. I see that in my students too.

TIME: How much tax do you pay yourself?

Scouring: In Küsnacht that is around 30 percent of income, plus ten percent AHV, i.e. social security. But because we lived in the US until recently, our tax return is so complicated that I don't do it myself.



Dear readers,

In ZEIT: Alpen, we measure three countries from Switzerland, Austria and southern Germany four times a year. This time the Alps are meant quite literally: Who is spreading out there - and how are they changing for all of us as a result? And you can read in our story about the Swarovski clan that it's not just snow that glitters here. Anyone looking for a shared weekly view of Germany, Austria and Switzerland, this roof of Europe, will find it in the Alpine podcast "Servus. Grüezi. Hallo." Have fun!

Your Patrik Schwarz, ZEIT Country Manager