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Through this war-tax increase in property is for the greater part annexed. But secondly, a further tax levied for the " need of the Reich " (Reichsnotopfer) makes a deep inroad on unin- creased property, as calculated on Dec. 31 1919. This affects companies, especially companies with shares, and other societies for gain, on their net property, that is without the paid-in capital and without reserve funds intended for general utility or benevolent objects, at a rate of 10%. It also applies to the property of individuals, leaving only a property of 5,000 marks tax-free, though in the case of married couples this is increased to 10,000 marks tax-free, and, for those who have children, a further amount of 5,000 marks tax-free is allowed for the second and each additional child. Consideration is also extended in the case of proprietors of industrial enterprises who are liable to be hampered by the depletion of capital, the capital employed in the business being calculated not to the full amount but only up to 80% of its value.

The rate for individuals is as follows :

First 50,000 marks (in full

Next 200,000 marks. 35%

or in part)

. 10%

500,000

. 40

Next 50,000 marks

'. 12

500,000

45

100,000

15

1,000,000

50

" 200,000

. 20

2,000,000

55

" 200,000

25

' 2,000,000

. 60

" 200,000 "

3

All further amounts. . 65

This works out as set forth in the following table:

Taxable

Amount of

Taxable

Amount of

property

tax

property

tax

1,000 marks

100 marks

350,000 marks

56,000 marks

5,000

500

400,000

66,000

10,000

1,000

450,000

78-510

15,000

1,500

500,000

91,000

20,000

2,000

550,000

103,500

25,000

2,500

600,000

116,000

30,000

3,000

650,000

131,000

35-0

3.500

700,000

146,000

40,000

4,000

750,000

161,000

45,000

4-500

800,000

176,000

50,000

5,000

850,000

193,500

55,ooo

5,600

900,000

211,000

60,000

6,200

950,000

228,500

65,000

6,800

1,000,000

246,000

70,000

7,400

1,500,000

446,000

75,000

8,000

2,000,000

671,000

80,000

8,600

2,500,000

921,000

85,000

9,200

3,000,000

1,171,000

90,000

9,800

3,500,000

i ,446,000

95,000

10,400

4,000,000

1,721,000

100,000

11,000

5,000,000

2,271,000

150,000

18,500

6,000,000

2,871,000

200,000

26,000

7,000,000

3,471,000

250,000

36,000

8,000,000

4,121,000

300,000

46,000

For each additional

1,000 marks 650

marks more

The tax has to be paid in cash or in war loan, but may be paid in yearly part payments, the unpaid amount being charged 5 %, and it must be paid off within 26 years. If real property is given as security, where the payment is secured by entry in the official register 46 years are allowed for payment.

The third form of property-tax, inheritance duty, consists of a considerable extension of the former inheritance- and gift-tax, with the addition of a succession-tax after the pattern of the English estate duty. Inheritance- and gift-tax are calculated under six classes, according to the relationship of the beneficiary:

Class i Wife or husband and children, including illegitimate children recognized by the father.

Class 2 Descendants of the children.

Class 3 Parents, brothers and sisters.

Class 4 Grandparents, descendants of first degree of brothers and sisters, parents-in-law, step parents, children-in-law, step children and adopted children.

Class 5 Descendants of second degree of brothers and sisters, brothers and sisters of the parents, brothers- and sisters-in-law.

Class 6 Other beneficiaries (except as regards communities, churches, benevolent and utilitarian societies, foundations, etc., in which case the rate is always 10%).

The following are the rates of the tax per cent for the different classes, an allowance, however, being made for 5,000 marks being tax-free for the first five classes, and 500 marks for the sixth class:

Class I

Class

2

Class 3

Class 4

Class 5

Class 6

For first 20,000 marks tax-

able part or full

4

5

6

8

10

15

For following 30,000 marks

5

6

8

10

12

20

50,000

6

8

10

12

15

25

50,000

8

10

12

15

2O

30

50,000

10

12

15

2O

25

35

100,000

12

15

20

25

30

40

200,000

15

2O

25

30

35

45

250,000

2O

25

30

35

40

50

250,000

25

30

35

40

45

55

500,000

3

35

40

45

5

60

All further amounts.

35

4

45

50

60

70

The highest rates apply where the taxable benefit exceeds one and a half million marks. The tax increases by i % of the amount; that is, if the already existing property of the beneficiary is 100,000 marks but not over 200,000, for each 10,000 marks; where the existing fortune exceeds 200,000, for each 20,000 marks. The increase must not exceed 100% of the tax. The total of the inheritance duty must not exceed 90% of the benefit. For a legacy arising before April i 1935 the tax is reduced i% for each year down to April i 1925, and for each earlier year 2%. Reduction down to March 31 1921 is therefore 20%.

The succession duty (estate duty) is calculated solely on the property which has been left, without reference to relationship or number of beneficiaries; it applies to landed property, business capital, and personal property in so far as it exceeds 50,000 marks. The tax does not apply to gifts between living persons. The rate of tax is, for the first 200,000 marks (part or whole), i %; for the following 300,000, 2%; for the following 500,000, 3%; for the following 1,000,000, 4%; and for further amounts 5%. If the value does not exceed 200,000 marks the first 20,000 marks are tax-free.

It is necessary to consider the effect of all these taxes together on property and income, to obtain a clear idea of what the bur- dens mean. At the Brussels Conference of 1920, the German Government submitted to the British delegates a statement which gives examples in explanation:

Example No. I. A private individual with property worth on June 30 1919 100 million marks, showing an increase of 25 millions, dies in 1920 and leaves his property to two nephews in equal shares. One nephew has no property, the other has property stated at one million marks. Taxation on the 100 millions is as follows:

(1) War-tax on increase 24,828,000 marks

(2) " Need of Reich " levy, on balance of

75,172,000 marks 47,779.55 "

(3) Succession duty on property (27,392,450

marks) 1,332,622 "

(4) Inheritance duty to be paid by nephew

who has no property .... 5,032,245

(5) Inheritance-tax to be paid by nephew who

has property of 1,000,000. . . 7,548,367

Total taxation 86,520,784 marks

There remains, of the original property of 100,000,000, only 13,479,216.

Example No. 2. A private individual has property worth 10,000,- ooo marks of which 4,000,000 are from shares in a company for gain, which could have paid in 1920 a dividend of 20%, if it had not been obliged to pay companies-tax. The rest is landed property, returning 5 %. There is no increase in property. Without taxes this person would have an income of 1,100,000 marks per annum. The ' Need of Reich " levy exacts 5,417,750 marks, leaving 4,582,250 marks. The untaxed income on this would be 800,000 marks from dividends and 29,112 marks from rents, or 829,112 marks. This is reduced by 160,000 marks for companies-tax, 64,000 marks for return on capital, and 315,160 marks for income-tax, leaving an income of 289,952 marks.

Example No. 3. A private individual has property worth 1,000,000 marks; no war profit. Property rented out brings 5%. One-third of the " Need of Reich " levy (244,250 marks), 82,250 marks, is paid, leaving a balance of 162,000 marks, on which there is 6| % interest to pay. On the remaining property, 917,750 marks, the income is 45,887 marks. Out of this there is to be deducted: 6j% on 162,000, 10,530 marks; return on capital-tax, 4,588 marks; income-tax, 7,272 marks; or 22,390 marks in all, leaving the remain-