Germany's Finance Minister Lars Klingbeil caused a minor political earthquake last week when he told ZDF that he would not "take any option off the table" when it comes to filling a 30-billion-euro hole in the 2027 budget — widely understood as a signal that higher taxes on high earners are back on the table.
Chancellor Friedrich Merz moved quickly to shut it down. The coalition agreement rules out tax increases, he said. That agreement stands.
For now.
I have watched German tax politics for twenty-five years. I have heard this conversation before. And the pattern is always the same: the coalition holds the line, the budget gap widens, the political calculus shifts, and what was ruled out in December becomes policy by autumn.
I am not predicting this will happen. I am saying the risk is real, the direction of travel is clear, and the time to act is before the question is settled, not after.
The Numbers Behind the Noise
Germany's fiscal situation is genuinely difficult. The Schuldenbremse — the constitutional debt brake — was loosened to fund the Sondervermögen for defence and infrastructure, but that loosening has limits. The coalition's social spending commitments are substantial. Industrial output has been sluggish. The tax base is under pressure.
The Left Party's proposal, backed by a DIW study, claims a revived wealth tax could raise 147 billion euros annually. That number is almost certainly inflated — it assumes no behavioural response, no capital flight, no restructuring by those affected. Every serious economist knows this. The politicians proposing it either also know it and do not care, or they do not know it and should not be setting fiscal policy.
But the political logic is powerful. 65% of German voters support higher taxes on high earners. In a coalition government that needs to fight elections in four years, that number matters more than the academic literature on capital mobility.
What a Wealth Tax Would Actually Do
Germany had a wealth tax. It was suspended in 1997, after the Constitutional Court ruled that the existing assessment methodology was unconstitutional because it undervalued real estate relative to financial assets. It has never been formally abolished.
The legal framework for revival exists. The political will is building. The budget pressure is real.
What would a revived wealth tax actually do? Based on every comparable example — France's ISF, Norway's formue tax, Spain's patrimonio — it would do three things.
First, it would capture a portion of wealth from those who do not restructure. Mostly those with illiquid assets — farmers, Mittelstand owners, property holders who cannot easily move their balance sheet.
Second, it would trigger significant restructuring by those who can. High-net-worth individuals with portable wealth, mobile businesses, and international advisors would restructure their affairs in advance. This is legal. This is what I help clients do.
Third, it would produce far less revenue than projected. France's ISF was a political success and a fiscal disappointment for exactly this reason. Macron abolished it in 2017. The Norwegian version is driving a genuine exodus of wealthy residents to Switzerland. Germany would likely see a similar pattern.
What You Should Do
If you are a German entrepreneur or investor with significant assets — a business, a portfolio, property, or financial wealth above a few million euros — and you have been telling yourself you will deal with the emigration question at some point, that point may be approaching faster than you expect.
The exit tax, the Wegzugsteuer, is calculated at the moment of departure. If your business valuation grows between now and when you eventually leave, your exit tax bill grows with it. And if a wealth tax is introduced before you leave, you will have paid a year or more of a tax designed to prevent you from accumulating the capital that makes exit worthwhile.
The window to restructure is not permanently open. Act before the debate is resolved, not after.
Work with Sebastian
If the direction of German tax policy is making you think seriously about your options, this is the conversation I have with clients every week. Exit tax planning, destination structuring, business reorganisation — all of it needs to start well before the move. Book a consultation.