Do we deserve to inherit our family’s wealth?

What would you do with a $27 million inheritance?

Let’s put this figure in perspective. As per the World Bank data, hundreds of millions of people earn less than $4,465 a year in countries ranging from Afghanistan to Zimbabwe. A person who makes that much would need at least 6,000 years to spend $27 million.

That’s a mind-boggling sum even in rich countries including Australia, France, Germany, South Korea and the United States, where average annual income (measured as Gross National Income) comes to around $13,846.

So when Marlene Engelhorn announced earlier this month that she’d give away $27 million of her inheritance, it kicked off a debate about why rich kids should get a headstart in life.

Engelhorn, 31, is an Austrian heiress. Her grandmother, who passed away in 2022, left her a huge sum.

“I am only wealthy because I was born in a rich family, and, I think, in a democratic society of the 21st century, birth should not be the one thing that determines whether or not you're gonna get to lead a very good life,” she said recently.

Her fortune has roots in her family’s sale of the Boehringer Mannheim company in 1996-97.

The great divide

With inequality rising around the world, governments have come under pressure to tax the wealth that rich parents pass down to their children.

Attitudes towards wealth inequality vary, but what makes inheritance taxes tricky is that wealth is considered a part of the family’s property.

The sentiment is that the government is generally not allowed to intervene with how the funds are dealt with, says Stefan Jestle, a research associate at the Vienna Institute for International Economic Studies.

“From an intergenerational perspective, the wealth belongs to the same family over time. As one person of the family has eventually earned or accumulated the wealth that is then inherited over next generations, the wealth is seen as the achievement of the family.”

“This seems to be the main driver why inheritance taxation is unpopular,” Jestle tells TRT World.

However, from a more individualistic point of view, he says it appears unfair for a rich kid to inherit large sums without making any effort to earn it.

“The individuals just had luck to be born into a rich family. Society enables certain families to accumulate wealth. Therefore, a certain part of the wealth should be given back to society.”

‘Born directly into the boss's armchair’

Austria is one of the few European countries that do not impose an inheritance tax, which it abolished in 2008.

Since the government isn’t taxing her wealth, Engelhorn is setting up a citizens group called Guter Rat or Good Council. It will randomly select 50 people in Austria who will help come up with ways to redistribute her €25 million ($27 million) inheritance.

A long-time vocal advocate for a wealth tax and higher taxes on the ultra-rich, Engelhorn says she is walking the talk on inequality, and thinks it’s high time for those who can afford to give back to society like her to be taxed.

“Inheriting means being born directly into the boss's armchair — but not even needing it,” she wrote in a statement on Guter Rat.

“Inheriting means that doors open — doors which others never ever get to see in their lifetime. Inheriting means feeling financial security that protects you from unbearable work, unbearable or inadequate housing, health disadvantages and much more.”

Jestle, whose areas of studies include labour mobility, labour markets, and wealth and income distribution, says the level of taxes, especially on workers, is already quite high in Austria.

“Therefore, many have already called for shifting from taxes on labour to higher taxes on wealth.”

For the greater good

In Roald Dahl's The Wonderful Story of Henry Sugar, a wealthy man learns the ability to see through playing cards and uses it to win handsome sums of money in casinos.

The titular character, Henry, who was already “wealthy because he had had a rich father who was now dead,” eventually realises that having more than enough money than he’ll ever need doesn’t spark as much joy as he thought it would, leading him to throw his money out of his balcony.

Engelhorn, who is the descendant of Friedrich Engelhorn, the founder of chemical giant BASF, wants to encourage public debate on wealth distribution.

Simply donating the money, or setting up a new NGO, won’t help address the causes of inequality.

From March to June this year, 50 young people who will each be compensated by Engelhorn for their time and effort, will gather on several weekends in Salzburg alongside academics and civil society organisations to develop solutions for how best her money can benefit the public.

The issue of wealth inequality is particularly pressing in Austria where the top five percent richest people own about 54 percent of country's net wealth.

Last year, Austria's opposition Social Democrats (SPOe) made a new call for an inheritance tax to be implemented as Austrians face a persistent cost-of-living crisis. The proposal, however, was rejected by the ruling conservative People's Party (OeVP).

Engelhorn’s initiative comes at a time when Oxfam reports the world’s five richest men have more than doubled their vast wealth since 2020, saying that the world could have its first trillionaire within a decade.

And what happens to Engelhorn after she has given away so much of her wealth? Engelhorn, who has studied German literature and language, wants to go into the field of editing.

“But it’ll be fine — I’m born into a rich family, no matter what I do, I will always have a very, very good and tight safety net, one that I think we should provide as a society to everybody and that shouldn’t be a matter of birth privilege,” she says.

“I will have that, and so I don’t think it’s going to be an issue for me.”