Focus did an interesting financial story today.
So, there's this foundation group....German Institute for Economic Research (DIW)....and they have been doing yearly surveys of 12,000 residences. One of the key things that they continually look for....is upscale wealth. The definition? Having more than 3-million Euro.
To be honest with me....anyone having one-million Euro is wealthy. But DIW defined it with 3-million Euro.
So, what they found generally.....year after year.....was only 44 folks out of the 12,000 who had the 3-million Euro in wealth.
There's a problem here, which they readily admit. According to statistical data, there ought to be lots more out there, and they just don't exist. What this typically leads to.....is this summary or belief by the public of tens of thousands of people throughout Germany with this kind of wealth. This goes hand in hand with the idea of massive taxation (48-percent suggested by the SPD), to take away the wealth of these ultra-rich folks.
If you did the numbers with this SPD wealth-tax.....there would be around 10 to 11 billion EXTRA Euro in the tax revenue bucket.....BUT only if you had the anticipated people that the SPD talks about in summaries.
DIW states a curious thing about this knowledge factor.....that the German government actually knows more about Hartz IV (welfare) folks.....than ultra-rich folks.
So, do the ultra-rich exist or not? I've spent twenty-odd years in and around Germany, and will make three observations about this whole topic.
1. Generally, you find the ultra-rich in clusters. If you travel into Wiesbaden, Hamburg, certain neighborhoods of Stuttgart and Munich, and a few areas of Berlin.....you will find the ultra-rich. If you travel around Bitburg, Worms, or Moosburg.....no, you won't find them. My guess is that of the 12,000 residences that the DIW folks talk to.....it's in small towns or average working-class neighborhoods.
2. Ultra-rich Germans don't exactly advertise their status or their income. You can go up to a guy who has a dozen business operations and ask him about his income, and he'll just say in the quarter-million Euro range each year.....when he's actually pulling in ten times that amount. You can go and talk to well-to-do Germans who pull in 70,000 Euro a year after taxes, and other than their car or vacation travel....you might not realize that they are doing that well.
3. A lot of German hide their income. Ever since WW II.....it's been a common practice. People buy homes in foreign countries (like Greece or Croatia), or they buy into a investment deal in Malta and just sneak the money in to pay for the deal.
I talked to an American real estate guy who had a German come in and talk over some open lots in southern Colorado (in the middle of the Rockies).....and the German wanted three lots.....but he wanted to only pay in cash (Deutsche Marks at the time). It was clearly money-laundering and the lots probably wouldn't show profit for ten years.
Back in the 1990s, I sat and watched a news documentary piece talk about a 'bust' at the Lux border.....some German carpenter trying to cross over with his RV, and the coffee can in the vehicle held around 80,000 DM's. It was supposed to be black-cash that he'd collected over one year and destined for a bank account there.
DIW is correct. I doubt if the government has any true idea about the true wealth of its citizens and they are missing tens of billions in income.
If the SPD wealth tax goes through? Two years later, I would speculate.....they will admit that there's a lot of money which ought to be there....but isn't. More taxes? Yeah.....that's the only way to proceed.