Wealth taxes in the context of climate policy

Project manager: Prof. Dr. Ulrich Klüh, ZNWU/Darmstadt Business School
Project collaborator: Andreas Kaltwasser, ZNWU/Darmstadt Business School


The topic of wealth taxation is currently once again the subject of great controversy in German political discourse. This often leads to a mixture of several individual questions: Economically, for example, there is a debate about whether wealth taxes have a negative impact on investments and can thus lead to overall economic losses despite higher tax revenues. This overlaps, for example, with ethical questions about the justification of growing wealth concentration and sociological questions about the sustainability of a social order in the context of increasing inequality.

At the same time, there is an urgent need for ecological action due to climate change and the crossing of further planetary boundaries. The common criticism of CO2-taxes to have a regressive effect (i.e. to burden low-income earners more in relative terms), as well as the protest of the yellow vests, which was sparked not only by the planned increase in fuel tax but also by the abolition of the wealth tax, suggest a joint consideration and treatment of both problem areas.


The question motivated by this context is what means of wealth taxation are available to achieve climate policy goals in the most socially acceptable and economically efficient way. Catchy and internationally widely used examples of this are property tax concessions for land with a high ecological contribution, as well as tax rebates for the energy-efficient renovation of buildings.

However, these renovations are only one example of sustainable investments, which offer long-term savings potential through energy savings and the use of renewable energy sources, but are associated with high initial costs. This requires a more detailed examination of the economic question posed at the beginning: How do different forms of wealth taxation affect investment behaviour?

Research methods

First of all, a comprehensive literature search will provide a broad overview of the mentioned topics.
This is followed by an evaluation of existing (or historical) examples in which wealth taxation and ecology have been treated in conjunction.
Finally, the connection between wealth taxation and investment behaviour will be examined from several perspectives: An initial literature search indicates that the common belief of a negative correlation does not necessarily hold true: older international studies do not show a strong correlation between wealth taxes and growth, while more recent research results even suggest that wealth taxes have an investment-increasing effect.
An international econometric study of the correlation between wealth taxes and investment will be a separate contribution to this.
In addition, this correlation will be investigated with a behavioural economics experiment.