Inheritance in Germany 1911 to 2009: A Mortality Multiplier Approach

Abstract

We estimate the size of inheritance and gift flows in Germany for selected years over the last century, applying the methodology used by Piketty (2011) for France and combining national accounts, tax statistics and survey data (mainly the German Socio-Economic Panel, SOEP). The data clearly supports the finding of a U-shaped evolution. The annual flow of inheritance and gifts was almost 15% of national income in 1911 and declined to less then 2% by the middle of the last century. Over the last five decades, it has risen steadily to over 10% of national income in recent years, amounting to Euro 220 billion in 2009. The pattern is close to the evolution in France, but at a slightly lower level. Evidence on transfers based on pure household survey data or inheritance tax statistics yields much lower values. We can decompose the gap between the taxed and the aggregate inheritance flow: controlling for valuation and tax evasion effects, the taxed flow would be at least twice as high; tax exemption effects account for the rest.

JEL Classification: D31, H24, N34