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by xyzzyz 816 days ago
> Now, public health care (Germany does not have universal healthcare) and social security are not taxes

If you don’t count these as taxes (you should, though), US comes out even stronger. At $200k/year, your effective income tax rate in Maryland is 23%. At $500k/year you’re still at just 33%.

For comparison, if you make in Maryland equivalent of 50k EUR/year, your effective tax rate, including social security and Medicare is just 21%. If you make $55k/year, your job typically offers some health insurance, so if you include employee side premiums for those, you will end up with something like 25%.

And that’s all before we even consider Germany’s 19% VAT vs MD’s 6% sales tax rate.
1 comments
gndk 815 days ago
I agree with the US coming out stronger. One of the reasons why I'm working on moving myself and my business there.

I'm not so sure about counting them as taxes. Here are the edge cases for both in Germany:

1) You don't pay social security (~21%) if you are self-employed or a shareholder-director (with certain minimum percentage of shares) of a corporation. You can opt-in voluntarily, but most people don't like to light their money on fire, so almost nobody does that. There have been some attempts to turn this exemption over, but so far it stands. But the majority are employed with no way to avoid this, so they could count it as a tax.

2) Public health insurance is a percentage of your gross income (~20%), but it is actually mostly tax deductible. If you are over a certain income threshold (currently ~70k€/year), you can switch to private health insurance, which is a fixed rate instead of income percentage. This has pros (better service) and cons (hard to switch back to public health insurance after a certain time out of it, more expensive as you age, close family members not automatically included, preexisting conditions might be excluded from coverage).

What makes the whole thing even more complicated to compare, is that both public health insurance and social security are split between employee and employer on the payroll statement. So a gross salary of 60k€/year actually costs the employer 72k€/year. So for a better comparison, this total cost of employment and the total deductions should be compared. Most online calculators, politicians, discussions in the media, etc conveniently leave this out and therefore show much lower percentages, so your average employee isn't aware of this.

  60k gross salary
  72k total cost of employment
  12,7k social security
  12,2k public health insurance
  10,7k taxes
A total of 49,33% deductions. And yes, after that comes 19% VAT (reduced to 7% for some goods, e.g. food) and other consumption taxes (fuel, energy, tobacco, etc). Tax on fuel is especially crazy at a total percentage of 59% for gasoline and 50% for diesel.

I guess everybody needs to decide for themselves if living (or employing people) in a declining socialist country is worth that much.

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