This strikes me as really sad: Family-owned businesses might be taxed as an inheritance instead of being left alone and allowed to operate continuously. How can the Germans who demand this believe that businesses won’t be affected?
My suspicion: They don’t. They’re socialists, and don’t really want family-owned businesses. But that’s just a suspicion.
At present, companies can be transferred to heirs, prior or after the owner’s death, tax-free as long as the heirs keep running the business for at least seven years and without substantial layoffs. By contrast, non-business assets upwards of €500,000, or around $616,000, for spouses or €400,000 for children are taxed in line with the beneficiary’s income-tax bracket.
Nearly two-thirds of German family businesses say they will have to cut investment and half say they will have to slash jobs if the tax privilege is abolished, according to a survey conducted by the Munich-based Ifo economic institute, which polled 1,729 companies in February and March.
Of those that have already gone through a succession process, 43% said they would have had to sell the company or parts of it if they hadn’t benefited from the exemption.
The ruling could have far-reaching implications for German business. Partly thanks to the exemption, a full 92% of German companies are family-owned, one of the highest levels in the world. Big tax bills could lead some companies to be sold or split up, while others may be forced into liquidation, business lobbyists warn.
Economists are concerned too. The Mittelstand, the small to mid-sized companies that make up the backbone of the German economy, account for its export prowess, and are largely family-owned. They generate more than half of the country’s economic output and employ 60% of its workforce.