German Millionaires Volunteer to Pay 'Rich Tax'

A group of 51 German millionaires and billionaires founded a Club of the Wealthy and wrote to Chancellor Angela Merkel proposing to give up 10 percent of their income in the form of a "Rich Tax" for 10 years to consolidate the budget.

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With an estimated 800,000 millionaires (in dollars) — about 1 percent of the total population — Germany is eye-to-eye with the USA and has long overtaken the UK as Europe's number one "millionaire-land", both in terms of absolute numbers and as a percentage of the population.

But traditionally, the Germans don't dare to feel good about their riches. A German would — by and large — never display his wealth too publicly. Being rich, one might think, is not necessarily viewed as a sign of success, but more as a flaw, something to be hidden rather than displayed.

Post-war Germany created its very own brand of capitalism — the “Soziale Marktwirtschaft”, which literally translated means “social market economy”, but in essence it understands itself as capitalism with a strong social conscience; an economic blueprint that is built on a consensus society, rather than one of social conflict.

Wages are negotiated once a year by big blocks or industrial trade unions for whole sectors or industry, rather than in individual companies.

Silvia Wadhwa
CNBC Anchor

That has brought Germany decades of labor peace, but also a certain degree of inflexibility in the labor market. The economy is shaped to achieve a steady pace, rather than high peaks. The social safety net is knit much tighter than in many other countries.

That has its costs and its pitfalls. The costs? — More than 100 billion euros (or a quarter of the German federal budget each year) spent on social security, unemployment benefits and the like.

Feeling Guilty?

The benefits? — Virtually no jobs lost in the recent financial and economic meltdown — not least of all too subsidized short-shift arrangements that encouraged companies not to fire people they might later on want to rehire. An unemployment rate that hovers around 7.6 percent (compared to close to 10 percent in the US).

The present political debate in Germany about the upcoming 80 billion euro austerity package adds more fuel to the fire.

Angela Merkel has drawn scathing criticism even from within her own centre-right coalition for planning to take too much money out of the pockets of the lower income ranks while not levying extra taxes from the top earners.

Maybe that's why at least some of Germany's "Have-a-lots" now feel they want to live up to their responsibility that they reckon comes with wealth.

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But let's not forget we are talking about 51 of an estimated 800,000 plus German millionaires and billionaires.

And so far, the richest of the rich in Germany — like the heirs of the Porsche clan, the Quandt family (BMW) or the founders of multi-billion euro discount empire Aldi — are not to be found on the list of those who propose to relinquish a sizable chunk of their wealth. And then, even the 50 odd rich and super rich that have said they would be prepared to hand over 10 percent of their annual income — very commendable offer indeed — haven't actually done anything yet, have they?

The Roman poet Ovid put it so candidly more than 2,000 years ago: “Everyone is a millionaire where promises are concerned”.

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