Household economic surveys, such as the German Socio-Economic Panel, notoriously underestimate the degree of income and wealth inequality at the upper end of the distribution.
To combat this, a new approach developed by Thomas Piketty and co-authors analyzes tax return data in an attempt at better measuring top incomes and wealth. But in the case of Germany, this approach faces a number of difficulties. Since 2009, capital incomes have been subject to a flat rate withholding tax, levied at source. In addition, Germany abandoned the wealth tax in 1997. Read more