Why an Austrian heiress wants to give away her $27.3 million fortune

Marlene Engelhorn doesn't want her grandmother's inheritance. Well, most of it that is. When she died in September 2022, Marlene inherited a $27.3 million fortune and didn't pay a penny in tax thanks to Austria's decision to abolish inheritance tax in 2008.

Most people would relish the prospect of retiring at 31 with millions in the bank, but it's a situation that has left Marlene conflicted. "I've inherited a fortune, and therefore power, without having done anything for it," she said in a statement. "And the state doesn't even want taxes on it."

Her plan is to give away 90% of her cash, but she doesn't know who to give it to. She's created the Guter Rat (Good Council) project and sent letters to 10,000 Austrians over the age of 16 at random to help her decide. The respondents will be whittled down to 50 decision makers who will decide how the money will be spent. Fifteen substitutes will also be selected, in case of drop outs.

Engelhorn isn't alone. A growing number of the world's wealthy are calling for a wealth tax. They want politicians to redistribute their wealth to boost the prospects of billions of people who are struggling to make ends meet amid a cost of living crisis and to solve many of the planet's other ills. 

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The birth lottery

By her own admission in 2021, Marlene won the "birth lottery". She's the descendant of Friedrich Engelhorn, the founder of German chemical and pharmaceutical company, BASF, and inherited her fortune when her grandmother died in September 2022.

Traudl Engelhorn-Vechiatto, Marlene's grandmother, had established a fortune estimated by U.S. magazine, Forbes, to be worth $4.2 billion. But even before her death, Marlene announced she would be giving away most of her cash. In previous interviews, she's suggested she'll keep 10 percent as a financial buffer.

But most people aren't so lucky. In January 2023, the European Parliament Eurobarometer survey revealed that the rising cost of living was the most pressing concern for 93 percent of Europeans, with rising food, energy and fuel prices putting pressure on purse strings.

The survey also showed that in every EU Member State, more than seven in 10 respondents said they were worried about the issue, with peak results in Greece (100 percent), Cyprus (99 percent), Italy and Portugal (both 98 percent).

Engelhorn wants to help them. She said: "If politicians don't do their job and redistribute, then I have to redistribute my wealth myself," she explained in her statement. "Many people struggle to make ends meet with a full-time job, and pay taxes on every euro they earn from work. I see this as a failure of politics, and if politics fails, then the citizens have to deal with it themselves."

Redistributing wealth

Engelhorn's frustrations are largely fuelled by the abolishment of inheritance tax in Austria - she's spent the last few years campaigning to reinstate it. The issue has divided political parties in Austria. The Social Democrats, a major opposition party, has called for it to be reinstated.   

Andreas Babler, the party's leader, says inheritance tax must be a key issue of discussion during coalition negotiations, if a political party fails to win a majority following the Austrian general election, which is set to be held later this year.

Some of Europe's biggest countries enforce tax on inherited wealth at varying rates. In the UK, people are taxed between 20-40 percent, while in Germany that figure can span anywhere between 7 and 50 percent. In Spain, it can be as high as 87.6 percent.

In the absence of taxation, Engelhorn chose citizens, made up of all age groups, federal states and social backgrounds, who will be tasked with generating ideas to redistribute her wealth to benefit society as a whole, rather than just a single demographic or economic class.

The group are taking part in a series of meetings in Salzburg between March and June this year, alongside academics and civil society organizations. In order to make the meeting as open as possible, interpreters and childcare are offered to participants. Travel costs are also covered and $1,300 (€1,200) paid to each person.

Engelhorn says citizens will be providing a "service to democracy" and says she will place absolute trust in the 50 people. "I have no veto rights," she said: "I am putting my assets at the disposal of these 50 people and placing my trust in them." 

But, if the group can't come up with a widely supported plan of action that receives the support of the majority of participants, the money will be returned to the heiress, who must then decide whether to select a further 50 people or pursue another avenue of redistribution.

The moral millionaires

The annual World Economic Forum in Davos sees some of the world's wealthiest people and leading political figures gather for a week of meetings to discuss solutions to a host of pressing global issues, such as global security, job creation, climate initiatives, and AI development.

But last year, a group of self-proclaimed 'patriotic millionaires' , including Engelhorn, descended on Davos to protest against the growing economic gulf between the rich and the poor. A report by Oxfam revealed that the world's wealthiest men had seen their global wealth double to $1.5tn since the start of the pandemic.

In contrast, the report outlined how the incomes of 99 percent of the world's population had reduced between March 2020 and October 2021.  Oxfam also predicts that by 2030, 3.3 billion people will be living on less than $5.50 per day.

The patriotic millionaires say the solution is to tax the rich more. Phil White, a former business consultant and member of Patriotic Millionaires UK, said last year: "While the rest of the world is collapsing under the weight of an economic crisis, billionaires and world leaders meet in this private compound to discuss turning points in history.

"It's outrageous that our political leaders listen to those who have the most, know the least about the economic impact of this crisis, and many of whom pay infamously little in taxes."

A wealthier future

If the world's wealthiest are taxed more heavily, what impact will that have on society? Oxfam's report says that a modest annual tax of just 5 percent on the wealth of the world's richest individuals could bring in $1.7 trillion in a year. That would be enough to lift two billion people out of poverty.  

It also states that Elon Musk, one of the world's richest men, paid a "true tax rate" of about three percent between 2014 and 2018. Meanwhile, Aber Christine, a flour vendor in Uganda, makes $80 a month and pays a tax rate of 40 percent.

Half of the world's billionaires also live in countries with no inheritance tax for direct descendants. They will pass on a $5 trillion tax-free treasure chest to their heirs - that's more than the GDP of Africa - and will drive a future generation of aristocratic elites. 

The wealth of the richest people is largely unearned and comes from returns on their assets. Despite that, it's taxed on average at 18 percent, just over half as much as the average top tax rate on wages and salaries.

If world leaders don't decide to tax the rich more aggressively, then Engelhorn and a growing group of millionaires are ready to find new ways of doing it themselves.

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