Reich Flight Tax
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The ''
Reich ''Reich'' (; ) is a German language, German noun whose meaning is analogous to the meaning of the English word "realm"; this is not to be confused with the German adjective "reich" which means "rich". The terms ' (literally the "realm of an emp ...
'' Flight Tax (german: Reichsfluchtsteuer) was a German
capital control Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measure ...
law implemented in 1931 to stem
capital flight Capital flight, in economics, occurs when assets or money rapidly flow out of a country, due to an event of economic consequence or as the result of a political event such as regime change or economic globalization. Such events could be an increas ...
from the
German Reich German ''Reich'' (lit. German Realm, German Empire, from german: Deutsches Reich, ) was the constitutional name for the German nation state that existed from 1871 to 1945. The ''Reich'' became understood as deriving its authority and sovereignty ...
. After seizing power, the Nazis used the law to rob emigrating Jews of their financial assets. The law was created through decree on 8 December 1931 by ''Reichspräsident''
Paul von Hindenburg Paul Ludwig Hans Anton von Beneckendorff und von Hindenburg (; abbreviated ; 2 October 1847 – 2 August 1934) was a German field marshal and statesman who led the Imperial German Army during World War I and later became President of Germany fro ...
. The Reich Flight Tax was assessed upon departure from the individual's German domicile, provided that the individual had assets exceeding or had a yearly income over . The tax rate was initially set at 25 percent. In 1931, the Reichsmark was
fixed Fixed may refer to: * ''Fixed'' (EP), EP by Nine Inch Nails * ''Fixed'', an upcoming 2D adult animated film directed by Genndy Tartakovsky * Fixed (typeface), a collection of monospace bitmap fonts that is distributed with the X Window System * ...
at an exchange rate of per
dollar Dollar is the name of more than 20 currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore dollar, U ...
, making equal to US$47,600 (). In
Nazi Germany Nazi Germany (lit. "National Socialist State"), ' (lit. "Nazi State") for short; also ' (lit. "National Socialist Germany") (officially known as the German Reich from 1933 until 1943, and the Greater German Reich from 1943 to 1945) was ...
, the use of the Reich Flight Tax shifted away from dissuading wealthy citizens from moving overseas and was instead used as a form of "legalized theft" to confiscate Jewish assets. The departure of Jewish citizens was desired and permitted by the Nazi governmenteven after the
Invasion of Poland The invasion of Poland (1 September – 6 October 1939) was a joint attack on the Republic of Poland by Nazi Germany and the Soviet Union which marked the beginning of World War II. The German invasion began on 1 September 1939, one week aft ...
until a decree from
Heinrich Himmler Heinrich Luitpold Himmler (; 7 October 1900 – 23 May 1945) was of the (Protection Squadron; SS), and a leading member of the Nazi Party of Germany. Himmler was one of the most powerful men in Nazi Germany and a main architect of th ...
forbade Jewish emigration on 23 October 1941. The tax was steadily increased and used as a "partial expropriation" to seize the assets of Jewish refugees who were
persecuted Persecution is the systematic mistreatment of an individual or group by another individual or group. The most common forms are religious persecution, racism, and political persecution, though there is naturally some overlap between these terms ...
and driven to flee their homeland.


Historical background

The
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
of 1929 led to massive loan cancellations from the international banking system; this particularly affected Germany, which had an estimated foreign debt of in 1931, of which alone had to be repaid in the first half of the year. The German government limited free capital flows and controlled the exchange of foreign currency, while also implementing austerity measures and raising the income tax. These measures precipitated a wave of
capital flight Capital flight, in economics, occurs when assets or money rapidly flow out of a country, due to an event of economic consequence or as the result of a political event such as regime change or economic globalization. Such events could be an increas ...
, and the Reich Flight Tax was intended to dissuade wealthy would-be emigrants from leaving the country. The idea that penalizing "unpatriotic desertion" (relocation overseas to avoid taxation) was not new. In 1918, the German government had passed the "Law against tax evasion" (german: Gesetz gegen die Steuerflucht, ''Reichsgesetzblatt'' I, p. 951) which was repealed in 1925. Because of the increasingly precarious and dysfunctional parliamentary government in the final years of the
Weimar Republic The Weimar Republic (german: link=no, Weimarer Republik ), officially named the German Reich, was the government of Germany from 1918 to 1933, during which it was a constitutional federal republic for the first time in history; hence it is al ...
, a series of emergency decrees were issued in lieu of normal legislating through parliamentary procedure.


Decree of 8 December 1931

The Reich Flight Tax was only of many other measures implemented by the "Fourth Decree of the
Reich President ''Reich'' (; ) is a German noun whose meaning is analogous to the meaning of the English word "realm"; this is not to be confused with the German adjective "reich" which means "rich". The terms ' (literally the "realm of an emperor") and ' (lit ...
on the Protection of the Economy and Finance and on the Defense of Civil Peace" (german: Vierte Verordnung des Reichspräsidenten zur Sicherung von Wirtschaft und Finanzen und zum Schutze des inneren Friedens, published in the ''Reichsgesetzblatt'' 1931 I, pp. 699–745.): there were also regulations on prices, interest rates, the housing industry, social insurance, labor law, and financial rules, as well as gun control regulations and the forbidding of uniformed bodies. As a temporary "Measure Against Capital Flight and Tax Evasion", individuals who were citizens of
Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
as of 31 March 1929 and had moved or would move their residence abroad before 31 December 1932, the Reich Flight Tax would be assessed, provided the emigrant had taxable assets in excess of or an annual income over . The tax rate was set at 25% of total assets or income and was also applied retroactively. Taxable persons who attempted to evade this penalty could be punished with no less than three months imprisonment and an unlimited fine. The names of those abroad who evaded this penalty were listed in a "Tax
wanted poster A wanted poster (or wanted sign) is a poster distributed to let the public know of a person whom authorities wish to apprehend. They generally include a picture of the person, either a photograph when one is available or of a facial composite ...
" published in the ''Deutscher Reichsanzeiger'', and were to be arrested in the event of a visit to Germany. Any assets in Germany belonging to tax evaders who had moved overseas were seized. The law was supposed to
expire Expire was an American hardcore punk band from Milwaukee, Wisconsin, United States, active from 2009 to 2017. They were signed to Bridge 9 Records. History Expire was formed in 2009. They released three full-length albums, three EPs and one spl ...
at the end of the year 1932 but that year it was extended to 31 December 1934 (''Reichsgesetzblatt'' I, p. 572).


The Reich Flight Tax in Nazi Germany

The existing decree assessing the tax was substantially changed with the "Law Concerning Revision of the Specifications of the Reich Flight Tax" (german: Gesetz über Änderung der Vorschriften über die Reichsfluchtsteuer), issued 18 May 1934 (''RGBl.'' 1934 I, pp. 392–393), and was extended six times before being amended on 9 December 1942 (''RGBl.'' I, p. 682) to remain in force indefinitely. A major change included in the 1934 revisions was the lower limit for taxable assets was decreased from to (). The assessment means were also changed to the detriment of the would-be emigrant. As such, a much larger group of people were targeted by the tax. The tax, which was originally aimed at those who voluntarily sought to reduce their tax burden by moving overseas, instead affected primarily the Jews who wished to leave their homeland due to well-justified fears of violence, incarceration, and occupational limitations. Prior to ''
Machtergreifung Adolf Hitler's rise to power began in the newly established Weimar Republic in September 1919 when Hitler joined the '' Deutsche Arbeiterpartei'' (DAP; German Workers' Party). He rose to a place of prominence in the early years of the party. Be ...
'' in 1933, the funds raised through the Reich Flight Tax were comparably small, amounting to just under 1 million ℛℳ in 1932. After the
Nazi Party The Nazi Party, officially the National Socialist German Workers' Party (german: Nationalsozialistische Deutsche Arbeiterpartei or NSDAP), was a far-right politics, far-right political party in Germany active between 1920 and 1945 that crea ...
came to power in 1933, the wave of refugeescaused by the government's rapidly escalating
persecution of Jews The persecution of Jews has been a major event in Jewish history, prompting shifting waves of refugees and the formation of diaspora communities. As early as 605 BCE, Jews who lived in the Neo-Babylonian Empire were persecuted and deported. A ...
made up a substantial part of the government's finances. In 1933, the tax raised , eventually reaching a peak of in 1938. In total, the Nazi government collected in taxes through the Reich Flight Taxequivalent to 4 billion USD in 2019. An estimated 90% of these funds came from emigrants persecuted for religious or racial reasons.


Implementation

In order to legally emigrate, a "tax clearance certificate" (german: Unbedenklichkeitsbescheinigung) was required from the Tax Authority, certifying the payment of the Reich Flight Tax and other taxes. When individuals were suspected of intentions to emigrate, the Exchange Control Office of the Tax Authority could require a security deposit equivalent to the amount of the tax. A tight surveillance net was created to discover persons planning to flee the country: the
Reichspost ''Reichspost'' (; "Imperial Mail") was the name of the postal service of Germany from 1866 to 1945. ''Deutsche Reichspost'' Upon the out break of the Austro-Prussian War of 1866 and the break-up of the German Confederation in the Peace of ...
tracked change of address orders by Jews; freight companies were required to report moves;
notaries A notary is a person authorised to perform acts in legal affairs, in particular witnessing signatures on documents. The form that the notarial profession takes varies with local legal systems. A notary, while a legal professional, is disti ...
reported sales of real estate; life insurance companies were required to report cancellations of life insurance. The
Gestapo The (), abbreviated Gestapo (; ), was the official secret police of Nazi Germany and in German-occupied Europe. The force was created by Hermann Göring in 1933 by combining the various political police agencies of Prussia into one organi ...
surveiled the letter and telephone correspondence of suspected individuals. Even upon payment of the Reich Flight Tax, it was not guaranteed that an individual could leave the country with his or her remaining property. The exemption limit for foreign exchanges was set at . Bank deposits and security holdings were moved into frozen accounts, from which funds could only be transferred abroad with the payment of high penalties. The percentage of the funds confiscated increased over time: *January 1934: 20% *August 1934: 65% *October 1936: 81% *June 1938: 90% *September 1939: 96%


Repeal

The laws were repealed through the "Law for Repeal of Obsolete Tax Regulations" on 23 July 1953 (''Bundessteuerblatt'' 1953 I, p. 276). A replacement law that was discussed in the cabinet was not introduced in the
Bundestag The Bundestag (, "Federal Diet") is the German federal parliament. It is the only federal representative body that is directly elected by the German people. It is comparable to the United States House of Representatives or the House of Commons ...
, as various measures against capital flight were already in place through the overseeing allied powers.


Repayment

As established by the American-issued "Military Government Law No. 59; Restitution of Identifiable Property", all Reich Flight Taxes were ordered to be repaid insofar as it could be linked to emigration of persecuted peoples. The
German Restitution Laws The German Restitution Laws were a series of laws passed in the 1950s in West Germany regulating the restitution of lost property and the payment of damages to victims of the Nazi persecution in the period 1933 to 1945. Such persecution included wid ...
passed in 1953 included limitations and unfavorable calculations in § 21, which were lifted in the revision of 1956 in § 59. The refund payments were part of a larger program of ''
Wiedergutmachung The German word ''Wiedergutmachung'' after World War II refers to the reparations that the German government agreed to pay in 1953 to the direct survivors of the Holocaust, and to those who were made to work at forced labour camps or who othe ...
'', also including repayments of the '"Jewish Capital Levy" (german: Judenvermögenabgabe).


See also

*
Aryanization Aryanization (german: Arisierung) was the Nazi term for the seizure of property from Jews and its transfer to non-Jews, and the forced expulsion of Jews from economic life in Nazi Germany, Axis-aligned states, and their occupied territories. I ...
*
Expatriation tax An expatriation tax or emigration tax is a tax on persons who cease to be tax resident in a country. This often takes the form of a capital gains tax against unrealised gain attributable to the period in which the taxpayer was a tax resident of t ...
*
Haavara Agreement The Haavara Agreement () was an agreement between Nazi Germany and Zionist German Jews signed on 25 August 1933. The agreement was finalized after three months of talks by the Zionist Federation of Germany, the Anglo-Palestine Bank (under the dir ...


References


Further reading

* .


External links


Erlass der Reichsfluchtsteuer im Reichsgesetzblatt 1931
repeatedly extended in the following
Datenbank zu Reichsfluchtsteuer und Steuersteckbriefe 1932 - 1944


{{Webarchive, url=https://web.archive.org/web/20120627083912/http://www.berlin.de/sen/finanzen/zentral/organisation/ns_vergangenheit.html , date=27 June 2012 1931 in law Economy of Nazi Germany Law in Nazi Germany Law in Weimar Republic Legal history of Germany Pages translated from German Wikipedia Repealed German legislation The Holocaust in Germany