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Wealth Distribution: Who Made That Much Money?

2021-06-14T00:47:10.600Z

If you have rich parents, you can inherit a lot. If you have nothing, you can hardly build up wealth. How unfair is that? And what could politics do? A visit to a poor and a rich family.



Read the video transcript here

Wolfgang Grupp Junior, corporate


heir "We were privileged that we were allowed to go to boarding school at an early age without having to do anything at all, to study in London, yes."

Jessica Laue, single parent


"From children who have enough money at home - it is generally easier for them."

Rachelle Pouplier, DER SPIEGEL


»The rich are getting richer and richer in Germany - and the poor can hardly build wealth through work alone.

Why is money distributed so unevenly in Germany?

And what are the political responses to this development?

In this episode of Republic 21 we travel to a single mother from the low-wage sector and to two heirs of a large family business to find out: How do those who are particularly poor or particularly rich feel about this gap? "

The numbers we come across in our research are pretty sobering at first:

The poorer half of the population in Germany owns only 1.4 percent of total wealth - while the richest percent owns more than a third.

The rest is shared by the middle class and the wealthy.

Bonita Grupp and Wolfgang Grupp Junior definitely belong to the top percent.

They are the children and future heirs of the well-known textile manufacturer Wolfgang Grupp.

The Trigema company in Burladingen in Swabia employs 1200 people.

The family does not talk about their private assets.

The company value is estimated at at least 100 million euros.

We meet Bonita and Wolfgang Grupp in their parents' house to talk to them about their role as entrepreneurs.

Rachelle Pouplier, DER SPIEGEL


"How important was the Trigema company in your life?"

Wolfgang Grupp Junior, corporate


heir »

Trigema is part of my life.

We grew up with it.

We live directly across from the company and therefore we don't know life without the company.

And that's very nice too. "

Bonita Grupp, company


heiress “Both of our parents are in the company and have always set an example for us.

We played in the company as small children from childhood.

We worked there over the holidays.

It was never strange. "

As children, they went to boarding school in Switzerland and later studied economics in London.

Both returned to rural Burladingen to work in their parents' company.

Wolfgang Grupp Junior


"That would have to be the back, then you have the front part somewhere underneath, and then there is also the arms somewhere ..."

Today they take care of the areas of e-commerce and corporate customer sales.

Everyday life at the Laue family looks completely different.

It is at the lower end of the wealth and income scale in Germany.

Mother Jessica and her three children live in a four-room apartment in Berlin-Marzahn.

It's Andy’s birthday today.

Jessica Laue couldn't afford a real present for her son: he gets a deck of cards.

Jessica Laue, single parent


»We have now bought this at a bargain price.

That we can play a little wizard tonight.

If it's not a birthday party, then something small. "

Rachelle Pouplier, DER SPIEGEL


"How is it for you when you see now, other children may have a birthday and somehow get the giant Playstation or something ..."

Andy Laue, student


»I'll put it this way, everyone gets what they deserve.

I think it's more important that Grandma and such are there. "


Jessica Laue receives the minimum wage with her job as an accountant at a theater, currently 9.50 euros per hour.

With 40 hours of work per week, it comes to 1650 euros gross or 1300 euros net per month.

If she deducts the rent from 700 euros and the other monthly fixed costs such as electricity, telephone and insurance, there is next to nothing left of her wages.

That is why Jessica Laue has to top up unemployment benefit 2, i.e. Hartz IV: that is around 400 euros per month plus around 220 euros in child benefit per child and the maintenance advance.

She

can live on that.

Splitscreen:


The Grupps and the Laues, two families whose everyday life could hardly be more different - and for whom money plays a decisive role.

The journalist and author Julia Friedrichs describes in her book "Working Class" how unequal the relationship between rich and poor is in Germany.

During her research, she spoke to various low-income earners, such as cleaners and piano teachers.

Original sound from Julia Friedrichs, author »Working Class«:

»Despite the booming economy and almost full employment, these people have not succeeded in building up wealth.

This is due to low wages, low interest rates and skyrocketing real estate costs, and rising social security contributions.

But at the other end of the line, we have people who own shares in companies who hold shares.

And things have been going really, really well for them over the past 20 or 30 years.

The German state has decided to redistribute income, so those who earn a lot have to bear higher burdens.

And we see that it also brings something.

The state does not do that with wealth.

He's staying out of that. "

Rachelle Pouplier, THE MIRROR

»Julia Friedrichs says: In order to distribute the money more fairly, one would have to tax assets and capital more heavily. Actually, there is even a wealth tax in Germany, which is also anchored in the Basic Law. However, it has been suspended since 1997 because the Federal Constitutional Court said: The levy in this form is unjust. Real estate, for example, has to be taxed more heavily. But instead of improving the tax, the then government under Helmut Kohl simply suspended it. And that's how it stayed until today.

In three months the general election is and some parties also have plans for a wealth tax: The Greens want to earn 10 billion euros more.

The SPD 24 billion and the Left Party even 50 billion.

Experts do not consider the latter to be feasible.

Union, FDP and AfD generally reject a wealth tax. "


Another lever that the state can use to ensure redistribution would be a higher and more consistent inheritance tax.

But how much is actually inherited in Germany?

Nobody knows exactly: Officially, around 39 billion euros are inherited and given away for tax purposes every year (source: Federal Statistical Office 2019).

Tax revenue from it: around seven billion.

Most of the inheritances, however, remain untaxed.

High allowances and early donations to the next generation make this possible.

The German Institute for Economic Research estimates that much more is actually inherited: namely 250 to 400 billion euros per year - up to ten times as much as officially recorded.

Enormously large sums are seldom bequeathed: only 0.1 percent of all inheritances are over five million euros.

Often these are companies.

Bonita and Wolfgang Grupp are also looking forward to such a legacy. Father Wolfgang Grupp, 79, wants to run the business for as long as he can. One of his children will then be bequeathed the parental company, including a thatched house directly opposite. The other should get a role in the company, as well as the legacy of the mother: several thousand hectares of forest operations in Austria.

Wolfgang Grupp, Trigema boss


»

Erben is nice and right.

But inheriting does not only mean receiving positive things, it also means having an obligation: You can use this inheritance and enjoy yourself, but you also have to pass it on to the next generation.

I inherited, but indirectly had an obligation to pass it on to my children as well.

The mortgage, the responsibility for what lies here on this legacy is of course so great that I say that the other child who receives something else is freer. "

Trigema has been around since 1919. Wolfgang Grupp is the third generation to run the company.

It was clear to the siblings from an early age that they would inherit the company.

They were told early on that this is not only associated with privileges:

Wolfgang Grupp Junior, Trigema-Erbe


»I also have to do something and can't just inherit and then say:› Okay, I lean back and don't do anything anymore.

No, I also have a certain obligation to that.

And I think that's very important.

And I think it happens very, very often.

If you see smaller, medium-sized companies or even larger companies here, they do 100 percent of this duty. "

Bonita Grupp, Trigema heiress


»I think that's what makes Germany what it is.

So we are shaped by the middle class.

The middle class is the largest employer.

Sure, there are always successor problems, also simply that you can't find a successor.

But many who take on the responsibility would like to continue it and continue to do so in the long term. "

Rachelle Pouplier, DER SPIEGEL

»How

do you feel about


inheritance and inheritance tax?

Do you think this is just the way it is right now?

Should it be higher? "

Bonita Grupp, Trigema heir


“I just think it shouldn't lead to heirs saying: 'Okay, I can't continue the business like this, because I would have no idea how much debt I would have to take on in order to run the business in the next generation to continue.

Entrepreneurship has to be worthwhile.

That shouldn't take a back seat, because I think there are a lot of jobs attached to it.

And if you then of course stop people and say 'Okay, we're emigrating,' as I said, in the German state you are not served and neither is society.

This is also a common argument in politics.

That is why she is very cautious in such cases and often asks very little or no money anyway when inheriting a company.

The DIW estimates that the state could earn around 6 billion euros more from the few large inheritances.

Rachelle Pouplier, THE MIRROR

“If you look at the positions of the parties, so far only the left has been specific on the subject of inheritance tax: They are planning a reform through which the state could earn up to ten billion euros more.

The SPD describes the inheritance tax as in need of reform and unjust.

The Greens also believe that a reform is conceivable.

The other parties have not yet commented. "

To be able to inherit something, Jessica Laue would also like to achieve this goal in Berlin-Marzahn.

Rachelle Pouplier, DER SPIEGEL


»Would you also like a higher property or inheritance tax?

That the rich are taxed more heavily? "

Jessica Laue, single parent


»I say to myself who is lucky enough to be born into a rich family and, if necessary, to inherit well, I think you don't have to be punished for it.

He was lucky.

That's nice."

Rachelle Pouplier, DER SPIEGEL


"But he didn't do anything about it."

Jessica Laue, single parent


»Yes, but the parents.

Well, I guess someone in the family will have done something to make sure that the money was there.

I don't think there is any need to say now.

They have to pull the trigger more. "

Jessica Laue is by no means alone with this opinion.

Many have the impression that if they are inherited, they would have to give something to the state for the second time.

Jessica Laue, single parent:

“If you earn more, you already have more taxes and I think that should be enough.

For those who are lucky enough to inherit rich, I am happy, I would be happy too.

And then again the tax - why? "


In the political debate, too, the "problem of double taxation" is repeatedly used as an argument against inheritance tax.

Julia Friedrichs thinks this is a pseudo-argument.

Julia Friedrichs, author and journalist


»If, for example, I buy a property with my income that has already been taxed, I pay taxes on it again.

Or if I buy a bread roll, I also pay taxes again.

Only when it comes to inheritances is it pretended to be something completely monstrous.

I think that has to do with the fact that we often think that the money does not change hands, but rather flows with the blood.

But these are not structures that fit into a democratic country, rather it is more of a feudalist way of thinking, almost.

We actually know more from monarchies that claims are inherited. "

The principle of inheritance tax is also in the

social classes rather unpopular who could benefit from more redistribution.

This is also due to a widespread wishful thinking:

Julia Friedrichs, author


»... that such an inheritance is something that some people still somehow hope that it could happen.

And then everything goes very differently, almost like winning the lottery.

In the vast majority of cases, that doesn't happen.

In the vast majority of cases, people inherit who are already doing very, very well economically.

And that you are poor and then your heiress appears in Canada, it hardly happens. "

Jessica Laue also dreams of a better life, of more space, of something that she can leave to her children for once.

Her current job, she believes, brings her one step closer to this dream, despite the low wages.

Jessica Laue, single parent


»With my current employment contract, I can even take out a loan from the bank.

In other words, in order to be able to offer us something better as a family, I am looking for a cheap piece of land with a house.

I would be happy if I can pass something on to the children later.

Or later when I have grandchildren.

That I say: 'Man, kids, your grandchildren can come to me on weekends.

We have a pool here, you can swim, you can do.

That would be nice. "

A dream that is becoming less and less achievable.

Jessica Laue is looking for a property in Berlin or in the surrounding area.

With their net income of around 1300 euros, financing without inheritance or start-up capital is almost impossible there.

In the vicinity of large cities, i.e. where there is work, it looks like this almost everywhere in Germany.

Rising real estate prices are contributing to the growing inequality: people with low incomes can hardly afford property on their own, they can hardly build up wealth, and they can hardly move up in society.

Inheriting is a privilege.

The Grupp family has always been aware of this: paying fair wages is part of the corporate philosophy.

Skilled seamstresses get between twelve and 18 euros per hour.

At Trigema one speaks of the »company family«.

Wolfgang Grupp Jr., corporate


heir "Meal!"

Employee


"I heard you were going on vacation!"

Wolfgang Grupp Jr., corporate


heir "I'm going on vacation - where have you heard that again?"

Employee


"I had to embroider something for you."

Wolfgang Grupp Jr., Company


Heir »Did you embroider that?

Very good!"

Employee


"This wild boar or what ..."

Wolfgang Grupp Jr., corporate


heir »Nope!

Warthog! "

Employee


"Yes, exactly!"

Wolfgang Grupp Junior, corporate


heir “If I could take this example from the lady from Marzahn.

Well, you have to be able to look this lady in the eye.

I always say that politics can always provide framework conditions in a certain way.

But of course it is also up to the individual entrepreneur to ensure that his employees do not get into such a situation.

This lady works 40 hours.

She must also be able to live on it. "

And what does the person directly affected say about the minimum wage increase?

Rachelle Pouplier, DER SPIEGEL

"Do you

think that

would

help


if it were increased again now?"

Jessica Laue, single parent


»I think it should be seen.

Because I don't know how many companies could pay it at all and I don't know that they say: 'But to pay you the minimum wage, I have to fire someone else,' where I tell myself that is difficult at the moment. "

I'm surprised.

Jessica Laue could not live on her minimum wage alone, and yet she understands the employers who pay so little.

Can that be right?

Julia Friedrichs, author


»A job that only exists because someone gets so little money that at the end of the month they cannot live on it and then go to the state to get money to live on - that is yes not a viable system.

That doesn't work in the long run.

And in old age that's not enough anyway.

And then the state has to take over the costs. "

Rachelle Pouplier, DER SPIEGEL

»So is it time to raise the minimum wage?

If you look at the party positions on this, Die Linke wants to push through the clearest increase, namely from 9.50 to 13 euros.

The SPD and the Greens are also pushing for a significant increase, to 12 euros.

The CDU / CSU sees responsibility for the level of the minimum wage with the minimum wage commission


made up of employer and employee representatives, but introduced the minimum wage together with the SPD.

The FDP and AfD want to keep the minimum wage of currently 9.50 euros, as they consider abolition to be unpopular.

Low wages, rising real estate prices, low taxation on assets and inheritance.

All of this makes the gap between rich and poor widen further.

Politicians would have to improve - especially when it comes to minimum wages and wealth tax.

I'll take that with me after doing research for this film.

We will see which way the Federal Republic will take after the federal election.

In the next episode of Republic 21 we ask ourselves what this country would look like if only young people cared about climate protection.

See you next time. "

Source: spiegel

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