Wealth Disparity Fuels Tax Revolt as German Coalition Braces for Tense Summit

Massive inequality has ignited protests across Germany, with unions and opposition parties demanding the government crack down on large fortunes ahead of a critical coalition summit. The demonstrations – launched by the ver.di trade union on June 25 in Berlin, Cologne, Hamburg and Mainz – target looming welfare cuts and what critics call a policy bias toward austerity over structural reform.

The scale of the imbalance is stark. Germany’s poorest half owns just 1.2 percent of total household wealth, while the richest ten percent hold 70 percent, according to union-backed analysis. Standing behind the protest wave, DGB chief Yasmin Fahimi is pushing hard for action: a reintroduction of the wealth tax or a special levy spread over ten years, combined with a higher top income-tax rate.

“Whether protests will intensify depends on whether the government delivers a policy of renewed trust,” Fahimi warned. She accused the ruling coalition of leaning too heavily on savings rather than tackling structural inequalities.

Left and Greens lay out competing blueprints

Stealing a march on the coalition, The Left party unveiled its own tax overhaul. The plan would lift the basic personal allowance to 16,800 euros, benefiting workers earning up to 7,000 euros gross monthly – roughly 95 percent of all taxpayers. To fund that relief, The Left proposes a top income-tax rate of 53 percent on annual earnings above 85,000 euros, plus a 75 percent millionaire’s tax. Capital income would be taxed at the same level as wages.

The Greens have trained their sights on real estate. Currently, profits from selling a property held longer than ten years are tax-free. The party wants to scrap that exemption entirely, requiring all gains to be taxed at the seller’s personal rate. The Greens’ parliamentary group estimates the change would bring in six billion euros annually.

Bavaria’s inheritance-tax waiver hits a record

A particularly explosive issue at the July 1 summit is the generous exemptions for business assets in inheritance and gift taxes. In 2025, Bavaria alone waived a staggering 2.37 billion euros in gift tax – nearly triple the previous year’s figure – under a special hardship test for business holdings exceeding 26 million euros.

Germany’s Federal Constitutional Court is already examining whether the differential treatment of private versus enterprise wealth is constitutional. The Council of Economic Experts has also recommended tightening the wide-ranging relief rules.

Rent reform heats up alongside tax fight

The tax wrangling overlaps with the coalition’s second main item: pension reform. A commission released its report on June 23, recommending a gradual retirement-age hike to 67.5 years by 2041, combined with a mandatory capital-based pension.

Chancellor Friedrich Merz hailed the package as a “total work of art,” but unions see it differently. Fahimi attacked the planned elimination of the penalty-free pension after 45 contribution years as deeply unfair. Employer associations, meanwhile, warn of spiraling costs. Without countermeasures, the IMK economic institute projects the pension contribution rate hitting 22 percent by 2032.

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