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Tax burden in Germany for middleclass is at around 70%. Beeing a software engineer in germany means that you code 8months for the government and 4months for you

by mrwong 9y ago

Tax burden in Germany for middleclass is at around 70%. Beeing a software engineer in germany means that you code 8months for the government and 4months for yourself. The western governments introduced more and more “hidden” taxes. So just looking at income tax is not fair. Just because he advocates for lower taxes doesn’t mean he want anarchy.

fabian2k 9y ago
You're almost certainly including social security here, health care and retirement. This is not exactly a fair comparison, as in countries with lower tax burden you have to pay for those yourselves.
aaronbrethorst 9y ago
You're implying that government does nothing—or at least nothing positive, which is a specious argument at best.
_s 9y ago
> Tax burden in Germany for middleclass is at around 70%. Beeing a software engineer in germany means that you code 8months for the government and 4months for yourself. > The western governments introduced more and more “hidden” taxes. So just looking at income tax is not fair. Please don't pluck figures like that out of thin air - I worked in Berlin as a developer and I easily took home ~60% of my monthly salary (placing tax at around 40%). Those taxes already comprise of Social Security* (roughly 20%) and income tax (the remainder 20%). * Health, Retirement, Unemployment etc.
- krrrh 9y ago
  You’re not counting VAT which is 19% of most of what you purchase. Corporate tax is largely bundled into consumer prices as well, and depending on your consumption patterns, and transportations choices there are other taxes that apply. In no way is this list exhaustive.
  - SyneRyder 9y ago
    There's also the compulsory 9% Church Tax in Germany, unless you formally renounce your religion: http://www.telegraph.co.uk/news/worldnews/europe/germany/11380968/Compulsory-income-tax-on-Christians-drives-Germans-away-from-Protestant-and-Catholic-churches.html http://www.telegraph.co.uk/news/worldnews/europe/germany/113... Notably: "The changes include German banks now having to withhold the tax on capital gains of account-holders who are church members."
    - germanier 9y ago
      It's 8-9% of your income tax – so in reality maybe 2% of your income or less. This tax is levied by the churches. You may be against the fact that they get this right because you support a more strict separation of church and state (which is not in the spirit of the German constitution) but this is hardly something the state is to blame for.
      - SyneRyder 9y ago
        Ahh, I didn't realize it was a percentage of income tax. It was explained to me by Germans as tithing, according to the idea of donating 10% of your annual income to the church. I'm not necessarily for or against it, and it does seem pragmatic for the government to automatically collect it on the church's behalf. The part that does seem strange to me is that you have to renounce your religion to opt out of the automatic deduction, but I understand it's a cultural difference. I'm more used to the idea of contributions as voluntary. (I'm not German or religious, just an Australian who is a fan of Berlin & Germany and often considers moving there.)
        _s 9y ago
        You don’t have to “renounce” your religion or anything to that affect, it’s a checkbox on your income tax / wage form where you choose whether you wish to pay it or not. From what I remember it amount to taking ~1% or so off your salary.
- GeneralTspoon 9y ago
  I imagine that he/she is also including VAT in that 70% figure (which I believe is currently 23% in Germany). In Munich my taxes on my pay check were around 45% as a software dev (including pension & insurance). So 70% total tax might not be far off the mark (assuming that you spend most of your income on VAT goods & services). Although you have to remember it's not 23% of your totoal income, but 23% of the remaining 55%. There are also other hidden taxes though - import duty, corporation tax and council tax (cant remember if that was a thing in Germany), to name a few.
  - zaarn 9y ago
    It's 19% for most stuff and 7% for some other stuff, on average it's closer to 16 o 17% on everything you buy and pay. Once you account for the 17% being part of your remaining money, you get an effective incoming VAT tax rate of 8.5% (assuming you keep around 50%, if you keep more, this goes up) I believe the highest amount of income tax you pay is around 60%, plus 8.5% you get close to 70%. However, most people will pay closer to 45 and 50% tax or less so a more realistic figure is 50% to 60% income tax. It should probably also be included when you get benefits from things paid for in part by this, ie your insurances and pensions and such.
    - Xylakant 9y ago
      The highest amount of income tax you pay (Reichensteuer) is 47,48% (45% plus Soli). This number is a bit misleading though since the tax rate is a curve that starts at 14% for incomes above 8656 EUR and reaches a plateau of 42% at a yearly income of roundabout 53000 EUR. The highest tax rate only applies to the part of the income that exceeds about 250000 EUR. So the first 8k are tax free, for every EUR above that you pay a tax rate according to the curve and only the part of the income that exceed 250000 EUR pays the full 45%. So if you have a yearly income of 250001 EUR, the 45% get only levied on 1 EUR. It's obvious that the effective tax rate is far lower than 45% for any income that does not massively exceed 250k. The blue curve in that graph is the nominal tax rate (Grenzsteuersatz) and the green curve the effective rate: https://de.wikipedia.org/wiki/Einkommensteuer_(Deutschland)#/media/File:Grenz-undDurchschnittsEStsatzD2008.svg https://de.wikipedia.org/wiki/Einkommensteuer_(Deutschland)#...
- CodesInChaos 9y ago
  Keep in mind that what the employer pays is about 120% of your misleadingly labeled gross wage. From my point of view the division into employer and employee contributions to what you call Social Security is quite artificial and thus think that you need to compare the net wage with what the employer actually pays. For example, say your gross wage is 5k/month, the net wage 2.8k and the employer pays 6k. So you take home about 47% of what the employer pays.
- kqr 9y ago
  I don't know, both figures seem entirely reasonable to me. However, looking at the OECD figures for Germany of yearly tax revenue (all types of taxation) per capita (15 kUSD) and yearly average wages (45 kUSD), you'd think 30% was the average tax pressure. It then makes sense that you'd pay slightly more taxes, given that you probably earn more. What the other person may have referred to is some combination involving the tax wedge (the ratio between labour taxes and labour cost not counting taxes), which is 50% in Germany currently, and was near 55% a few years ago. But that number is not relevant to this discussion...
WA 9y ago
70%? How do you come up with that? It's roughly 40.5% for most middle class people. If your salary is 4,000€ per month, you get wired 2,380€ to your bank account. Income tax, social security contributions, retirement contributions etc. already deducted. You could add 19% VAT for all purchases on your tax burden, but that's not 70%.
- mrwong 9y ago
  Like I said its hidden. E.g. my employe pays around 90k for me of which I only see 78k then they apply Tax, pension, healthcare, mandatory unemployment insurance etc, Im left with around 40k. Then i go and spend it and it again gets taxed with 19%. Many products have beeryax, coffetax etc. higest is petrol tax which is 70%. So If i spend 200€ on petrol an month, 70% is tax. I could go on and on. like I said those tax are hidden.
kachurovskiy 9y ago
34% for a family with one child in Munich, 30.5% on capital gains.
Tomte 9y ago
> Tax burden in Germany for middleclass is at around 70% Even under a charitable interpretation this is simply wrong. I suppose you have no first-hand experience, but have read that on social media?
- OoooooooO 9y ago
  If you're self-employed the tax rate is ~70%, at least for lawyers in germany. Source: My self-employed gf. And no, she does not earn 5 figures, 4-6k gross per month with 1 part-time employee for the bureaucracy stuff (bills, phone service, faxing, scanning etc.). With a 60 hour week.
  - germanier 9y ago
    Your girlfriend does not pay 70% tax. This is mathematically impossible if you actually look at all tax rates.
  - Tomte 9y ago
    No, she doesn't. You must be counting all kinds of other expenses. Professional insurance or bar membership, for example.
lentil_soup 9y ago
That's just a big lie, it's nowhere to 70%. Besides it will vary depending on your salary, your state and your personal situation (i.e. kids, married, age). Also worth noting that that tax includes full health insurance. You can easily calculate your take home pay for Germany here: http://www.parmentier.de/steuer/steuer.htm?wagetax.htm http://www.parmentier.de/steuer/steuer.htm?wagetax.htm
- laingc 9y ago
  That’s only income tax, not the total tax burden. My total tax burden in Germany (Munich) was around 65%-ish, depending on exactly how aggressively you want to factor corporate taxes into consumer prices.
germanier 9y ago
Any credible calculation[0] puts the tax burden of all groups at 50% at most (and most middle class is not taxed at that number) – including all taxes, contributions, levies, and VAT. You would have to add the employer's contributions to that number (but they are less than 10%). A better measure would be the tax quota (gross national product divided by all taxes and contributions) which is about 35%. This is the effective rate the state gets for everything it does. [0]: Such as the RWI study which really can't be accused of downplaying the numbers http://shop.freiheit.org/download/P2@675/96532/A4_Steuern%20und%20Abgaben_Gutachten.pdf http://shop.freiheit.org/download/P2@675/96532/A4_Steuern%20...
throwaway13337 9y ago
There's also the most hidden tax of all: inflation.
TrickyRick 9y ago
And you didn't get healthcare, free education for 20+ years, subsidised student loans, retirement money, police, fire department etc. from the state? You really should stop and think what you get from the state before you criticise what the state takes from you.
- JoshTriplett 9y ago
  > You really should stop and think what you get from the state before you criticise what the state takes from you. And when you're done doing so, and decide that it's not a good deal for the money, then you're told to do it again, and again, until you get the "right" answer the person patronizingly telling you to do so expects. It's reasonable to have a discussion about the most reasonable, efficient, and appropriate way to fund certain things, as well as whether they should be funded at all, and whether funding them should be mandatory. Such discussions should not be derailed by people simply saying "think about what you get" as though the people participating in them haven't already thought about that just because they come to different conclusions.
  - olau 9y ago
    Taxes is traditionally a heated subject. I think it's unreasonable to express a simple (one-sided) argument within this subject and not expect a one-sided answer from someone. It is truly a complex subject. Now, I expect someone to disagree with that statement. :)
  - KozmoNau7 9y ago
    History shows us that privatization always ends up being more expensive for the average person, while still providing lower-quality service than the old public system.
    - mrwong 9y ago
      Example please? By that line of thinking the Soviet Union must have had the best and cheapest service and products. Also Venezuela should be a total Dream right now without empty stores, starving children, no murder rampage.

by mrwong 9y ago

fabian2k 9y ago

You're almost certainly including social security here, health care and retirement. This is not exactly a fair comparison, as in countries with lower tax burden you have to pay for those yourselves.

aaronbrethorst 9y ago

You're implying that government does nothing—or at least nothing positive, which is a specious argument at best.

_s 9y ago

> Tax burden in Germany for middleclass is at around 70%. Beeing a software engineer in germany means that you code 8months for the government and 4months for yourself. > The western governments introduced more and more “hidden” taxes. So just looking at income tax is not fair. Please don't pluck figures like that out of thin air - I worked in Berlin as a developer and I easily took home ~60% of my monthly salary (placing tax at around 40%). Those taxes already comprise of Social Security* (roughly 20%) and income tax (the remainder 20%). * Health, Retirement, Unemployment etc.

krrrh 9y ago
You’re not counting VAT which is 19% of most of what you purchase. Corporate tax is largely bundled into consumer prices as well, and depending on your consumption patterns, and transportations choices there are other taxes that apply. In no way is this list exhaustive.
- SyneRyder 9y ago
  There's also the compulsory 9% Church Tax in Germany, unless you formally renounce your religion: http://www.telegraph.co.uk/news/worldnews/europe/germany/11380968/Compulsory-income-tax-on-Christians-drives-Germans-away-from-Protestant-and-Catholic-churches.html http://www.telegraph.co.uk/news/worldnews/europe/germany/113... Notably: "The changes include German banks now having to withhold the tax on capital gains of account-holders who are church members."
  - germanier 9y ago
    It's 8-9% of your income tax – so in reality maybe 2% of your income or less. This tax is levied by the churches. You may be against the fact that they get this right because you support a more strict separation of church and state (which is not in the spirit of the German constitution) but this is hardly something the state is to blame for.
    - SyneRyder 9y ago
      Ahh, I didn't realize it was a percentage of income tax. It was explained to me by Germans as tithing, according to the idea of donating 10% of your annual income to the church. I'm not necessarily for or against it, and it does seem pragmatic for the government to automatically collect it on the church's behalf. The part that does seem strange to me is that you have to renounce your religion to opt out of the automatic deduction, but I understand it's a cultural difference. I'm more used to the idea of contributions as voluntary. (I'm not German or religious, just an Australian who is a fan of Berlin & Germany and often considers moving there.)
      - _s 9y ago
        You don’t have to “renounce” your religion or anything to that affect, it’s a checkbox on your income tax / wage form where you choose whether you wish to pay it or not. From what I remember it amount to taking ~1% or so off your salary.
GeneralTspoon 9y ago
I imagine that he/she is also including VAT in that 70% figure (which I believe is currently 23% in Germany). In Munich my taxes on my pay check were around 45% as a software dev (including pension & insurance). So 70% total tax might not be far off the mark (assuming that you spend most of your income on VAT goods & services). Although you have to remember it's not 23% of your totoal income, but 23% of the remaining 55%. There are also other hidden taxes though - import duty, corporation tax and council tax (cant remember if that was a thing in Germany), to name a few.
- zaarn 9y ago
  It's 19% for most stuff and 7% for some other stuff, on average it's closer to 16 o 17% on everything you buy and pay. Once you account for the 17% being part of your remaining money, you get an effective incoming VAT tax rate of 8.5% (assuming you keep around 50%, if you keep more, this goes up) I believe the highest amount of income tax you pay is around 60%, plus 8.5% you get close to 70%. However, most people will pay closer to 45 and 50% tax or less so a more realistic figure is 50% to 60% income tax. It should probably also be included when you get benefits from things paid for in part by this, ie your insurances and pensions and such.
  - Xylakant 9y ago
    The highest amount of income tax you pay (Reichensteuer) is 47,48% (45% plus Soli). This number is a bit misleading though since the tax rate is a curve that starts at 14% for incomes above 8656 EUR and reaches a plateau of 42% at a yearly income of roundabout 53000 EUR. The highest tax rate only applies to the part of the income that exceeds about 250000 EUR. So the first 8k are tax free, for every EUR above that you pay a tax rate according to the curve and only the part of the income that exceed 250000 EUR pays the full 45%. So if you have a yearly income of 250001 EUR, the 45% get only levied on 1 EUR. It's obvious that the effective tax rate is far lower than 45% for any income that does not massively exceed 250k. The blue curve in that graph is the nominal tax rate (Grenzsteuersatz) and the green curve the effective rate: https://de.wikipedia.org/wiki/Einkommensteuer_(Deutschland)#/media/File:Grenz-undDurchschnittsEStsatzD2008.svg https://de.wikipedia.org/wiki/Einkommensteuer_(Deutschland)#...
CodesInChaos 9y ago
Keep in mind that what the employer pays is about 120% of your misleadingly labeled gross wage. From my point of view the division into employer and employee contributions to what you call Social Security is quite artificial and thus think that you need to compare the net wage with what the employer actually pays. For example, say your gross wage is 5k/month, the net wage 2.8k and the employer pays 6k. So you take home about 47% of what the employer pays.
kqr 9y ago
I don't know, both figures seem entirely reasonable to me. However, looking at the OECD figures for Germany of yearly tax revenue (all types of taxation) per capita (15 kUSD) and yearly average wages (45 kUSD), you'd think 30% was the average tax pressure. It then makes sense that you'd pay slightly more taxes, given that you probably earn more. What the other person may have referred to is some combination involving the tax wedge (the ratio between labour taxes and labour cost not counting taxes), which is 50% in Germany currently, and was near 55% a few years ago. But that number is not relevant to this discussion...

WA 9y ago

70%? How do you come up with that? It's roughly 40.5% for most middle class people. If your salary is 4,000€ per month, you get wired 2,380€ to your bank account. Income tax, social security contributions, retirement contributions etc. already deducted. You could add 19% VAT for all purchases on your tax burden, but that's not 70%.

mrwong 9y ago
Like I said its hidden. E.g. my employe pays around 90k for me of which I only see 78k then they apply Tax, pension, healthcare, mandatory unemployment insurance etc, Im left with around 40k. Then i go and spend it and it again gets taxed with 19%. Many products have beeryax, coffetax etc. higest is petrol tax which is 70%. So If i spend 200€ on petrol an month, 70% is tax. I could go on and on. like I said those tax are hidden.

kachurovskiy 9y ago

34% for a family with one child in Munich, 30.5% on capital gains.

Tomte 9y ago

> Tax burden in Germany for middleclass is at around 70% Even under a charitable interpretation this is simply wrong. I suppose you have no first-hand experience, but have read that on social media?

OoooooooO 9y ago
If you're self-employed the tax rate is ~70%, at least for lawyers in germany. Source: My self-employed gf. And no, she does not earn 5 figures, 4-6k gross per month with 1 part-time employee for the bureaucracy stuff (bills, phone service, faxing, scanning etc.). With a 60 hour week.
- germanier 9y ago
  Your girlfriend does not pay 70% tax. This is mathematically impossible if you actually look at all tax rates.
- Tomte 9y ago
  No, she doesn't. You must be counting all kinds of other expenses. Professional insurance or bar membership, for example.

lentil_soup 9y ago

That's just a big lie, it's nowhere to 70%. Besides it will vary depending on your salary, your state and your personal situation (i.e. kids, married, age). Also worth noting that that tax includes full health insurance. You can easily calculate your take home pay for Germany here: http://www.parmentier.de/steuer/steuer.htm?wagetax.htm http://www.parmentier.de/steuer/steuer.htm?wagetax.htm

laingc 9y ago
That’s only income tax, not the total tax burden. My total tax burden in Germany (Munich) was around 65%-ish, depending on exactly how aggressively you want to factor corporate taxes into consumer prices.

germanier 9y ago

Any credible calculation[0] puts the tax burden of all groups at 50% at most (and most middle class is not taxed at that number) – including all taxes, contributions, levies, and VAT. You would have to add the employer's contributions to that number (but they are less than 10%). A better measure would be the tax quota (gross national product divided by all taxes and contributions) which is about 35%. This is the effective rate the state gets for everything it does. [0]: Such as the RWI study which really can't be accused of downplaying the numbers http://shop.freiheit.org/download/P2@675/96532/A4_Steuern%20und%20Abgaben_Gutachten.pdf http://shop.freiheit.org/download/P2@675/96532/A4_Steuern%20...

throwaway13337 9y ago

There's also the most hidden tax of all: inflation.

TrickyRick 9y ago

And you didn't get healthcare, free education for 20+ years, subsidised student loans, retirement money, police, fire department etc. from the state? You really should stop and think what you get from the state before you criticise what the state takes from you.

JoshTriplett 9y ago
> You really should stop and think what you get from the state before you criticise what the state takes from you. And when you're done doing so, and decide that it's not a good deal for the money, then you're told to do it again, and again, until you get the "right" answer the person patronizingly telling you to do so expects. It's reasonable to have a discussion about the most reasonable, efficient, and appropriate way to fund certain things, as well as whether they should be funded at all, and whether funding them should be mandatory. Such discussions should not be derailed by people simply saying "think about what you get" as though the people participating in them haven't already thought about that just because they come to different conclusions.
- olau 9y ago
  Taxes is traditionally a heated subject. I think it's unreasonable to express a simple (one-sided) argument within this subject and not expect a one-sided answer from someone. It is truly a complex subject. Now, I expect someone to disagree with that statement. :)
- KozmoNau7 9y ago
  History shows us that privatization always ends up being more expensive for the average person, while still providing lower-quality service than the old public system.
  - mrwong 9y ago
    Example please? By that line of thinking the Soviet Union must have had the best and cheapest service and products. Also Venezuela should be a total Dream right now without empty stores, starving children, no murder rampage.