Steel

Taxes and duties: only Belgians pay more than Germans

Summary

An unmarried employee without a child has to give up almost half of his gross earnings. That was the result of an OECD study. Accordingly, the burden of taxes and duties is only higher in Belgium. However, the share of […]

Taxes and duties: only Belgians pay more than Germans.  For every euro earned, average earners without children give up almost 50 cents (Source: Thinkstock by Getty-Images)

An unmarried employee without a child has to give up almost half of his gross earnings. That was the result of an OECD study. Accordingly, the burden of taxes and duties is only higher in Belgium.

However, the share of taxes and duties in total labor costs is declining in Germany and fell slightly again in 2013. A childless average earner gave 49.3 percent of his labor costs to the state or compulsory insurance. In 2012 it was 49.6 percent, in 2000 it was even 52.9 percent. These figures were given by the Organization for Economic Co-operation and Development (OECD).

The burden has also decreased somewhat in the other family constellations. According to this, taxes and duties have shrunk most for double-income couples without children. Your tax wedge was 45.1 percent, 0.4 percentage points below that of 2012.

The fact that the contribution to pension insurance fell at the beginning of 2013 may have played a role in the falling burden. However, the burden in Germany is still comparatively high. Among the 34 OECD countries, the OECD only found a higher burden in neighboring Belgium.

Not even a quarter of the burden in Switzerland

In other neighboring countries, however, the world often looks better. In Switzerland, taxes and duties only account for 22 percent of the average wage earner without children, and in Poland (35.6 percent), the Netherlands (36.9 percent) and Luxembourg (37 percent) there is much less due. In Austria (49.1 percent) or France (48.9 percent), however, the difference to Germany is not very great.

In terms of family support, Germany goes a few steps further than other countries, at least in the classic model with a single earner and a supervisor for the offspring. This shows the worthwhile effect of the German spouse splitting. The mean tax burden is calculated from both salaries. When either of these is zero, the family saves the most. The tax burden for two children is only 33.8 percent – France (41.6 percent) or Belgium (41 percent) offer significantly fewer discounts.

OECD average for childless singles at 35.9 percent

However, if both mother and father go to work, the burden is different. For example, if a partner with a part-time job adds 33 percent of the average wage, the OECD calculates 38.6 percent taxes and duties – and sees Germany again in the top group when it comes to burdens.

Overall, the tax burden increased in 21 member states, most of them in Portugal, Slovakia and the USA. Experts speak of the so-called control wedge. The OECD average for an unmarried employee without a child is 35.9 percent (+0.2 percentage points). “This continues a trend that started in 2011,” said the organization. By 2010, on the other hand, the burden had generally decreased.

According to the OECD, the tax and social security contributions on labor costs are calculated primarily from income tax and the social security contributions of employees and employers, minus child benefit, for example.