New study: Women inherit less but pay more taxes

  • From Sonja Hennen
  • Reading duration 3 min

No matter how rich women become, men are and remain richer on average. In 2022, women in Germany earned an average of 18% less per hour than men. If we look at wealth, we see that the average German man has 30,000 euros more than the average German woman. If pension entitlements were included, the gap between the sexes would be even higher.

Of course, these two facts are mutually dependent. Those who earn less for their work can also put less aside and save fewer assets. However, this fact is only partly responsible for the fact that men's wealth is increasing more than that of women. After all, the majority of wealthy people's wealth comes from inheritances and not from their own work.

This makes what social researcher Daria Tisch of the Max Planck Institute and her colleague Manuel Schechtl call the gender tax gap all the more serious. Tisch studies gender-specific social inequality. In her study "The Gender (Tax) Gap in Parental Transfers. Evidence from Administrative Inheritance and Gift Tax Data," she and Schechtl found that the German tax system, combined with conservative attitudes within wealthy families, indirectly discriminates against women.

On the one hand, men on average inherit significantly more and receive more gifts than women. Secondly, because what women receive is worth less on average. Overall, women receive 37 per cent fewer gifts and 13 per cent fewer inheritances than men. When comparing the value of inheritances received by women, it is on average seven per cent less than that received by men. In the case of gifts, the difference is as much as ten per cent.

In addition, women often receive different gifts than men. Women are more likely to receive property and other valuables such as shares or cash, while men are more likely to receive the family business or forestry and agricultural holdings. Businesses are often worth several million euros and generate money on an ongoing basis. They are also treated particularly favourably by the tax system. Highly profitable family businesses worth billions can often be passed on almost entirely tax free. In return, daughters receive assets that are more expensive to tax, such as cash. In figures, this means a gender tax gap of 2% for inheritances and 22% for gifts.

Tisch and Schechtl conclude that the tax system is an important factor in reproducing gender-specific wealth inequalities and maintaining selective access to status and power. Anyone who wants to eliminate this indirect discrimination against women in tax law would have to reduce the tax benefits for corporate inheritances. The Federal Constitutional Court has repeatedly ruled that these privileges are unconstitutional.

Read the full study here.