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Careful with the "of course marginal" and lumping all of Europe into one bucket :) E.g. Germany has a progressive tax rate system and the salary ranges this ap

Careful with the "of course marginal" and lumping all of Europe into one bucket :) E.g. Germany has a progressive tax rate system and the salary ranges this applies to are rather small. Quoting from: https://taxsummaries.pwc.com/germany/individual/taxes-on-personal-income https://taxsummaries.pwc.com/germany/individual/taxes-on-per... For a single taxpayer: Free amount: 9744 EUR Progressive tax from 14-42%: 9744-57918 EUR 42% on your entire salary from: 57918-274612 EUR 45%: > 274612 EUR Also see a nice explanation and graph here, though the numbers they use are different, because different tax years are assumed: https://en.wikipedia.org/wiki/Taxation_in_Germany#Income_tax https://en.wikipedia.org/wiki/Taxation_in_Germany#Income_tax

deleted 5y ago
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oblio 5y ago
I think you're misunderstanding his post. "Marginal" doesn't mean "small", it means "at the margins/edge". He's saying the same thing you're saying, that's how a progressive tax rate works: there are multiple tax brackets, each of them is taxed at an ever increasing tax rate, but always lower than 100% (so the more you make, gross, the more you get, net, too). In your example, even in Germany, the total tax rate for someone making more than €274 612 is not 45%. It's lower because the lower brackets get taxed less. Realistically, it seems like the actual tax rate for someone making over €274 612 would be somewhere around 36-38%. And anyone making that much in Germany will live like a king, anyway.
- tharkun__ 5y ago
  I understand very well thank you. I have lived in both tax systems ;) Germany does not in fact have tax brackets but instead has the aforementioned progressive tax. I think there's a problem of translation in the as well as the bracketing system used in many if not most countries are also technically progressive taxes. But progressive is the literal translation of how the taxation system is called in German ;) As the OP mentioned the 40% marginal tax rate only applies to the income above the threshold for that bracket. He is absolutely right about that and that's how I'm taxed where I live now. In contrast the German tax is applied to your entire income after the basic free amount and it is applied. To quote Wikipedia: > The German income tax is a progressive tax, which means that the average tax rate (i.e., the ratio of tax and taxable income) increases monotonically with increasing taxable income. The bracketing is only done above where it reaches 42%. To quote https://www.icalculator.info/germany/income-tax-klasses/2020.html https://www.icalculator.info/germany/income-tax-klasses/2020... >... use geometrically progressive rates which start at 14% and rise to 42%. This means that those rates are calculated as a linear evoving ratio rather than a straight percentage as typical in most other countries around the globe.

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oblio 5y ago

I think you're misunderstanding his post. "Marginal" doesn't mean "small", it means "at the margins/edge". He's saying the same thing you're saying, that's how a progressive tax rate works: there are multiple tax brackets, each of them is taxed at an ever increasing tax rate, but always lower than 100% (so the more you make, gross, the more you get, net, too). In your example, even in Germany, the total tax rate for someone making more than €274 612 is not 45%. It's lower because the lower brackets get taxed less. Realistically, it seems like the actual tax rate for someone making over €274 612 would be somewhere around 36-38%. And anyone making that much in Germany will live like a king, anyway.

tharkun__ 5y ago
I understand very well thank you. I have lived in both tax systems ;) Germany does not in fact have tax brackets but instead has the aforementioned progressive tax. I think there's a problem of translation in the as well as the bracketing system used in many if not most countries are also technically progressive taxes. But progressive is the literal translation of how the taxation system is called in German ;) As the OP mentioned the 40% marginal tax rate only applies to the income above the threshold for that bracket. He is absolutely right about that and that's how I'm taxed where I live now. In contrast the German tax is applied to your entire income after the basic free amount and it is applied. To quote Wikipedia: > The German income tax is a progressive tax, which means that the average tax rate (i.e., the ratio of tax and taxable income) increases monotonically with increasing taxable income. The bracketing is only done above where it reaches 42%. To quote https://www.icalculator.info/germany/income-tax-klasses/2020.html https://www.icalculator.info/germany/income-tax-klasses/2020... >... use geometrically progressive rates which start at 14% and rise to 42%. This means that those rates are calculated as a linear evoving ratio rather than a straight percentage as typical in most other countries around the globe.