Inequalities as a legacy

By Audrey SomnardLex Kleren Switch to French for original article

What if inequalities in Luxembourg were partly due to the absence of taxes for direct descendents? This is at least the idea put forward by the Chamber of Employees' think tank Improof. This idea is largely taboo in Luxembourg, where all political parties defend the status quo.

Two members of Improof, a newly formed think tank of the Chamber of Labour (CSL), wanted to throw a spanner in the works by tackling one of the country's great taboos: the absence of inheritance tax in direct line. Laurent Uhoda and Dylan Theis, economic advisors to the CSL, distilled their thoughts into three parts in a first article published on 20 February. For them, this absence of inheritance tax accentuates the inequalities that are growing in the country. "Generally speaking, I would say that what really distinguishes Luxembourg from European and neighbouring countries is the absence of inheritance tax in direct line, which is clearly a big difference with most other countries, " says Antoine Paccoud, a researcher in urban development and mobility at the Luxembourg Institute of Socio-Economic Research (Liser), quoted in the article. On average between 2018 and 2021, there was one inheritance liable to inheritance tax in Luxembourg for every four and a half exempted. For Laurent Uhoda and Dylan Theis, "there is therefore a potential source of useful revenue to achieve equality of opportunity, without doubt, but above all equality of hope and conditions by reducing the gaps linked to the environment of origin".

For the two authors of the article, inequalities are increasing under the guise of evolving in a society based on meritocracy: "In keeping with the apparent meritocracy that prevails, it thus seems largely curious and incoherent that Luxembourg should allow enormous bonuses to be granted 'on merit', which are fairly tax-free, and also authorise exemption from the transmission of these accumulated bonuses; unless, of course, merit means inheritance (and taking advantage of the benefits of birth) …"

For the latter, an inheritance tax would therefore be a way of combating these inequalities: "Luxembourg legislation is indeed extremely favourable to the transmission of family wealth from generation to generation, so that neither family wealth nor wealth inequalities have to suffer. The Economic and Social Council is therefore not mistaken when it states in 2018 that 'the economic usefulness of the tax [on inheritance] is theoretically identified as a means of limiting the inequality of the distribution of wealth or of curbing the excessive concentration of wealth'. In Luxembourg, however, it remains largely inoperative."

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