4 ms·

Well, correct me if I'm wrong - but according to this random website I found in 5 seconds of googling: https://www.expat.hsbc.com/expat-explorer/expat-guides/g

Well, correct me if I'm wrong - but according to this random website I found in 5 seconds of googling: https://www.expat.hsbc.com/expat-explorer/expat-guides/germany/tax-in-germany/ https://www.expat.hsbc.com/expat-explorer/expat-guides/germa... The highest band of income tax in Germany is 45% and obviously that's only on any amount over the threshold - so even if you make that much money your effective tax rate will be closer to 30% than 50%. So unless I'm missing something - I don't see how Germans could be paying 50% tax on their earnings?

selfmodruntime 1y ago
> Well, correct me if I'm wrong - but according to this random website I found in 5 seconds of googling: I will, because you are! Unfortunately, it's really easy because the German government applies a simple slight of hand. They call it a "gross employer contribution", which increases this band of income tax beyond the 45% you pay after the GEC. [1] It works like this: As your employer is paying your wage, amount X, they pay half of your contribution to social insurance companies. This so called "employer contribution" is subtracted before you are paid out your gross wage, amount Y, which you see on your pay slip. Now, on amount Y, you pay the other half of social insurance fees and taxes. Then you get your net, amount Z. Most sources you will find online will only talk about Y and what is subtracted to get to Z. But your employer pays your full wage for what your work is worth, and they of course are not as nice to gift your one half of social insurance payments to you. [1]: https://publikationen.bundesbank.de/publikationen-de/berichte-studien/monatsberichte/monatsbericht-juni-2024-932980?article=abgabenlast-auf-arbeitseinkommen-im-internationalen-vergleich-zum-unterschied-von-rentenbeitrag-und-steuerzahlung-932986 https://publikationen.bundesbank.de/publikationen-de/bericht...
- gambiting 1y ago
  I mean sure, but does that actually add up to over 50% of your income? Here in the UK it works exactly the same as you described, but the NI is 10% of your income - even if you are in the highest band for incomne tax(also 45%) you wouldn't get to 50% overall, maybe if you make millions a year that average would start getting close to 50% (and if you do, congrats!) And can I comment on the fact that Germany seems to be incredibly generous with their bands - the 45% band only kicks in at 280k euro, so like maybe 0.00001% of all workers are in that band? Here in the UK you start paying 45% from £125k and up. Anyway - the reason why I'm asking is because UK taxes and social obligations seem to be crazy high as it is, but even they won't get you to 50% total, not unless you literally make millions in income per year.
  - selfmodruntime 1y ago
    No, it adds up to almost 50% of your wage. People who make millions of dollars (freelancers, company shareholders, etc) pay capital gains taxes of 25%. High earning people have capital, not a wage, either by way of company shares or asset payouts. They pay a tiny bit more tax and no social obligations You forget that the 42% band kicks in at 68000 (up until 280k) not 10k from the median wage. You pay this with 1.2% of the median wage, when in the distant past (around 1960) you had 42% at 15 times the median wage. They never changed these bands to adjust for inflation.
    - gambiting 1y ago
      >> People who make millions of dollars (freelancers, company shareholders, etc) pay capital gains taxes of 25%. High earning people have capital, not a wage, either by way of company shares or asset payouts. They pay a tiny bit more tax and no social obligations Yes, obviously - it works the same way here. You just said that "anywhere in Germany" you will pay 50% of your income in taxes, so I'm asking if your average worker actually pays that, or even a high earning IT worker/lawyer/doctor, or just somone who takes home millions in pay(not capital gains) so that the averages catch up. >>You forget that the 42% band kicks in at 68000 (up until 280k) not 10k from the median wage. I didn't forget, but like I said 3 comments earlier - your average will work out closer to 30% not 50%(I'd guess) because you only pay it on anything above the threshold, not on your entire income. Again, Germany seems very generous here - in the UK you start paying 40% once you cross £50k/pa.
      - selfmodruntime 1y ago
        > You just said that "anywhere in Germany" you will pay 50% of your income in taxes, so I'm asking if your average worker actually pays that I earn about 60k (the government pays me, so you can look this up) and that is my effective rate of tax.
    - deleted 1y ago
      [deleted]
  - alexey-salmin 1y ago
- KPGv2 1y ago
  > They call it a "gross employer contribution" It feels disingenuous to me to see "someone else pays tax, so that counts as a tax on me" leveled as a serious argument. Maybe it's just my cold pragmatism speaking, but if your employer suddenly didn't have to pay that tax, I don't think they would bump your salary up. Americans make this same argument (they call it "trickle down economics"). So far, it doesn't seem to have worked out for them.
  - selfmodruntime 1y ago
    > It feels disingenuous to me to see "someone else pays tax, so that counts as a tax on me" leveled as a serious argument. They don't pay tax. They pay half of the social insurance fee for their employer. Of course that half is part of the wage you're being paid. > Maybe it's just my cold pragmatism speaking, but if your employer suddenly didn't have to pay that tax, I don't think they would bump your salary up. I could certainly use that range to negotiate my salary. > Americans make this same argument (they call it "trickle down economics"). So far, it doesn't seem to have worked out for them. None of this has anything to do with trickle down economics. The trick is that if social insurance payments go up, which they do a lot, my employer is charged automatically and I no longer have that room for negotiating a raise.

selfmodruntime 1y ago

> Well, correct me if I'm wrong - but according to this random website I found in 5 seconds of googling: I will, because you are! Unfortunately, it's really easy because the German government applies a simple slight of hand. They call it a "gross employer contribution", which increases this band of income tax beyond the 45% you pay after the GEC. [1] It works like this: As your employer is paying your wage, amount X, they pay half of your contribution to social insurance companies. This so called "employer contribution" is subtracted before you are paid out your gross wage, amount Y, which you see on your pay slip. Now, on amount Y, you pay the other half of social insurance fees and taxes. Then you get your net, amount Z. Most sources you will find online will only talk about Y and what is subtracted to get to Z. But your employer pays your full wage for what your work is worth, and they of course are not as nice to gift your one half of social insurance payments to you. [1]: https://publikationen.bundesbank.de/publikationen-de/berichte-studien/monatsberichte/monatsbericht-juni-2024-932980?article=abgabenlast-auf-arbeitseinkommen-im-internationalen-vergleich-zum-unterschied-von-rentenbeitrag-und-steuerzahlung-932986 https://publikationen.bundesbank.de/publikationen-de/bericht...

gambiting 1y ago
I mean sure, but does that actually add up to over 50% of your income? Here in the UK it works exactly the same as you described, but the NI is 10% of your income - even if you are in the highest band for incomne tax(also 45%) you wouldn't get to 50% overall, maybe if you make millions a year that average would start getting close to 50% (and if you do, congrats!) And can I comment on the fact that Germany seems to be incredibly generous with their bands - the 45% band only kicks in at 280k euro, so like maybe 0.00001% of all workers are in that band? Here in the UK you start paying 45% from £125k and up. Anyway - the reason why I'm asking is because UK taxes and social obligations seem to be crazy high as it is, but even they won't get you to 50% total, not unless you literally make millions in income per year.
- selfmodruntime 1y ago
  No, it adds up to almost 50% of your wage. People who make millions of dollars (freelancers, company shareholders, etc) pay capital gains taxes of 25%. High earning people have capital, not a wage, either by way of company shares or asset payouts. They pay a tiny bit more tax and no social obligations You forget that the 42% band kicks in at 68000 (up until 280k) not 10k from the median wage. You pay this with 1.2% of the median wage, when in the distant past (around 1960) you had 42% at 15 times the median wage. They never changed these bands to adjust for inflation.
  - gambiting 1y ago
    >> People who make millions of dollars (freelancers, company shareholders, etc) pay capital gains taxes of 25%. High earning people have capital, not a wage, either by way of company shares or asset payouts. They pay a tiny bit more tax and no social obligations Yes, obviously - it works the same way here. You just said that "anywhere in Germany" you will pay 50% of your income in taxes, so I'm asking if your average worker actually pays that, or even a high earning IT worker/lawyer/doctor, or just somone who takes home millions in pay(not capital gains) so that the averages catch up. >>You forget that the 42% band kicks in at 68000 (up until 280k) not 10k from the median wage. I didn't forget, but like I said 3 comments earlier - your average will work out closer to 30% not 50%(I'd guess) because you only pay it on anything above the threshold, not on your entire income. Again, Germany seems very generous here - in the UK you start paying 40% once you cross £50k/pa.
    - selfmodruntime 1y ago
      > You just said that "anywhere in Germany" you will pay 50% of your income in taxes, so I'm asking if your average worker actually pays that I earn about 60k (the government pays me, so you can look this up) and that is my effective rate of tax.
  - deleted 1y ago
    [deleted]
- alexey-salmin 1y ago
KPGv2 1y ago
> They call it a "gross employer contribution" It feels disingenuous to me to see "someone else pays tax, so that counts as a tax on me" leveled as a serious argument. Maybe it's just my cold pragmatism speaking, but if your employer suddenly didn't have to pay that tax, I don't think they would bump your salary up. Americans make this same argument (they call it "trickle down economics"). So far, it doesn't seem to have worked out for them.
- selfmodruntime 1y ago
  > It feels disingenuous to me to see "someone else pays tax, so that counts as a tax on me" leveled as a serious argument. They don't pay tax. They pay half of the social insurance fee for their employer. Of course that half is part of the wage you're being paid. > Maybe it's just my cold pragmatism speaking, but if your employer suddenly didn't have to pay that tax, I don't think they would bump your salary up. I could certainly use that range to negotiate my salary. > Americans make this same argument (they call it "trickle down economics"). So far, it doesn't seem to have worked out for them. None of this has anything to do with trickle down economics. The trick is that if social insurance payments go up, which they do a lot, my employer is charged automatically and I no longer have that room for negotiating a raise.