Imagine a country where inheriting wealth is so common that it’s the name of its longest-running TV quiz show. That’s Italy, where the idea of receiving a legacy is seen as the ultimate shortcut to financial success. But here’s where it gets controversial: while many Italians dream of inheriting riches, the country’s inheritance tax is astonishingly low compared to its European neighbors. And this is the part most people miss—economists argue that this light-touch approach comes at a steep cost, stifling social mobility and perpetuating generational privilege. Could Italy’s economic woes be eased by simply taxing inherited wealth more fairly? Let’s dive in.
Italy’s inheritance tax rates are significantly lower than those of its main economic partners, a fact that has sparked debate among analysts. They argue that higher revenue from inheritance taxes could be a game-changer for the country’s sluggish economy, providing funds to boost growth and reduce inequality. Yet, Prime Minister Giorgia Meloni has firmly ruled out targeting the wealthy, leaving many to wonder if Italy is missing a golden opportunity. What’s more, a staggering majority of Italy’s billionaires are heirs rather than self-made entrepreneurs, highlighting the deep-rooted nature of this issue.
In 2024, inherited wealth in Italy reached a staggering 243 billion euros, or 14% of its national output. According to economists Salvatore Morelli and Demetrio Guzzardi, this figure has doubled in the past 30 years, reaching levels not seen since the 19th century. While Italy’s situation is extreme, the trend of surging inherited wealth is common in many advanced economies, driven by the accumulation of assets by post-war baby boomers. However, Italy stands out for taxing this wealth at an average rate of less than 0.5%, a third of the global average, with heirs of large fortunes enjoying particularly lenient treatment.
Here’s the kicker: Italy’s low inheritance tax isn’t just a financial issue—it’s a social one. Salvatore Morelli points out that this system stifles social mobility, ensuring that privilege remains concentrated within the same families across generations. Take Giovanni Ferrero, Italy’s wealthiest individual, who inherited his $41 billion fortune from his father. This isn’t an isolated case; a UBS report reveals that only 42% of Italy’s billionaires are self-made, one of the lowest rates in Europe.
The roots of this phenomenon run deep. A Bank of Italy study found that families in the top third of wealth in 1427 Florence were 50% more likely to remain in that bracket in 2011, despite centuries of wars, plagues, and revolutions. While this study made waves when published in 2016, it failed to spark any meaningful tax policy changes. Today, Italy’s inheritance tax yields a mere 1 billion euros annually, compared to 9 billion in Germany and Britain, and 21 billion in France.
But here’s where it gets even more intriguing: if Italy aligned its inheritance tax with the EU average, it could generate nearly six billion euros more each year. Economists like Tito Boeri argue that this revenue could be used to strengthen public education and childcare, key drivers of growth and equality. Others suggest it could fund tax cuts for lower earners, boosting domestic demand. Yet, Meloni’s government remains staunchly opposed, dismissing calls for higher taxes on the wealthy.
The debate is heated, with Meloni herself declaring that wealth taxes will ‘never see the light of day’ under her leadership. This resistance is particularly strong in Italy, where public services are often subpar by EU standards, and trust in the state is low. The late Silvio Berlusconi even abolished inheritance tax entirely in 2001, though it was later reintroduced at low rates. Meloni has further tilted the scales in favor of the wealthy by making it easier to avoid inheritance taxes through lifetime donations.
Here’s the part that might surprise you: Italy’s overall tax system already favors the rich. While legacies up to 1 million euros are exempt for spouses and children, other beneficiaries face higher rates with lower exemptions. In contrast, France and Germany have stricter thresholds and tax bands reaching up to 60%. Critics argue that higher inheritance taxes would hurt growth and drive the wealthy abroad, but evidence from France and Germany suggests otherwise. As Sant’Anna University’s Giacomo Gabbuti notes, these countries tax inheritances heavily without significant economic fallout.
So, here’s the question: Is Italy’s light touch on inheritance tax a missed opportunity for economic and social progress? Or is it a necessary policy to protect family wealth and avoid driving the rich away? Let us know your thoughts in the comments—this is one debate that’s far from over.
