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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 y

by _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.
        germanier 9y ago
        You actually have go through a formal renunciation process (which is done at a state authority but your church will get notified and will not be pleased). That checkbox doesn't actually do anything, it is just your declaration of the official religion status. Lying on tax forms is, well, not the best idea.
        _s 9y ago
        Ah I see - I moved over as a foreigner (no previous religious affiliations) so that’s probably why I didn’t have to do anything beyond the taxation declaration.
        Xylakant 9y ago
        You still have to officially renounce your church membership if you're member of either the catholic or protestant church. Otherwise the church may at some point come and recoup past taxes for up to 10 years.
  - zaarn 9y ago
    Formally renouncing your religion is easy and can be done fairly quickly, I've done it.
  - _Codemonkeyism 9y ago
    The 9% are on the income tax, e.g. 9% of 40% not on income.
- a-saleh 9y ago
  so .. 59% tax then?
  - CodesInChaos 9y ago
    You can't just add the percentages for income tax and VAT. If you were to combine a 40% income tax and a 19% VAT, you'd end up with 49.6% effective tax. (1-(1-0.40)/1.19) (I'm not arguing that this naive computation makes sense, you pay different VAT rates or no VAT at all, depending on what you buy. I don't think you have to pay VAT on rent, which is a significant part of the income for many people and reduced VAT on most groceries)
    - germanier 9y ago
      For the middle-class the estimates are that about 8% of your income goes to VAT.
    - a-saleh 9y ago
      Thanks! My brain kinda failed me there :)
- nikcub 9y ago
  A good way to normalize it for comparison is tax income as a proportion of GDP[0] The table on wikipedia[1] shows Norway, Finland, Denmark and Sweden at all over 50%. Germany at 44.5% while the UK is 34.4%, Australia at 34.3% and United States at 26% [0] https://stats.oecd.org/Index.aspx?DataSetCode=REV# https://stats.oecd.org/Index.aspx?DataSetCode=REV# [1] https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...
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...

by _s 9y ago

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.
      - germanier 9y ago
        You actually have go through a formal renunciation process (which is done at a state authority but your church will get notified and will not be pleased). That checkbox doesn't actually do anything, it is just your declaration of the official religion status. Lying on tax forms is, well, not the best idea.
        _s 9y ago
        Ah I see - I moved over as a foreigner (no previous religious affiliations) so that’s probably why I didn’t have to do anything beyond the taxation declaration.
        Xylakant 9y ago
        You still have to officially renounce your church membership if you're member of either the catholic or protestant church. Otherwise the church may at some point come and recoup past taxes for up to 10 years.
- zaarn 9y ago
  Formally renouncing your religion is easy and can be done fairly quickly, I've done it.
- _Codemonkeyism 9y ago
  The 9% are on the income tax, e.g. 9% of 40% not on income.
a-saleh 9y ago
so .. 59% tax then?
- CodesInChaos 9y ago
  You can't just add the percentages for income tax and VAT. If you were to combine a 40% income tax and a 19% VAT, you'd end up with 49.6% effective tax. (1-(1-0.40)/1.19) (I'm not arguing that this naive computation makes sense, you pay different VAT rates or no VAT at all, depending on what you buy. I don't think you have to pay VAT on rent, which is a significant part of the income for many people and reduced VAT on most groceries)
  - germanier 9y ago
    For the middle-class the estimates are that about 8% of your income goes to VAT.
  - a-saleh 9y ago
    Thanks! My brain kinda failed me there :)
nikcub 9y ago
A good way to normalize it for comparison is tax income as a proportion of GDP[0] The table on wikipedia[1] shows Norway, Finland, Denmark and Sweden at all over 50%. Germany at 44.5% while the UK is 34.4%, Australia at 34.3% and United States at 26% [0] https://stats.oecd.org/Index.aspx?DataSetCode=REV# https://stats.oecd.org/Index.aspx?DataSetCode=REV# [1] https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...

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...