Hardly a tax issue seems to move the Germans as much as the top rate of tax. Since the Federal government has demanded Finance Minister, Olaf Scholz, in TIME, an increase of the tax from 42 to 45 percent, has begun a debate about the sense or nonsense of a higher tax burden from good earners.
In this debate, however, a lot of mess. So here is a post that refute three myths about the top rate of tax.
1. Millions of normal earners pay the top rate of tax
This is not correct, but then again not. According to the Federal Ministry of Finance have paid in the past year, about 2.9 million Germans in the top rate of tax. This does not mean, however, that these people have to also issue in fact, 42 percent of their income to the state. Because the top tax rate does not have to, as you may could be paid on the entire income of the Top income earners, but only on the portion of income that exceeds a certain limit. Currently this limit is set at a taxable income of 55.961 Euro for Singles and 111.922 Euro for married couples.
it is also Important: The taxable income equals the gross income, because taxpayers of certain Items – such as reimbursement of expenses for the retirement of the tax may drop. The exact amount of this sum depends on the personal circumstances. In General, he is in this income class, but to be about 10,000 euros. This means that, In practice, the top rate of tax from a gross income of around 65,000 euros.
the sum of these two effects, the loading due to the top rate of tax is significantly less draconian than it first appears. The Institute of the German economy has created a tax calculator that allows you to check. A family with two children and a household income of 125,000 EUR gross would count in the case of the FDP to the much-quoted performance-makers in the company. This family pays in the year, including the solidarity surcharge 30.456 euros in taxes. This corresponds to an average tax rate of 24 percent. Testifies to the of excessive government greed to this performance? You be the judge. I don’t think: rather.
by the Way, that same family paid just 13 percent of their income to taxes, if you earn € 60,000 gross. So much for the means a rip-off layer. If the social security contributions and indirect taxes are included, there are other stress effects, but this is not finally the issue.
2. A high top rate of tax is damaging the economy
This is at least controversial. The Argument for this Thesis goes something like this: If the state takes up a large part of the income, then performance is no longer worthwhile. In the result, people work less, the managers neglect their company and potential company founders no longer run the risk of the development of its own operation always brings with it.
This Argument is not entirely wrong, but here, as so often: It depends on the dose. A tax rate of 60 or 70 per cent from the first Euro would certainly bring a large part of the economic activity to a Standstill. It’s not about that. It’s about tax increases for top earners. Whether it makes the work really made a difference, that the top tax rate is 45 instead of 42, is at least questionable. Since Scholz intends to use the additional revenue to relieve the burden on workers with lower incomes, or to increase the amount at which the top rate of tax kicks in. In the same way, you could also ensure that smaller and medium-sized enterprises that pay the top rate of tax, would be relieved if the increase would be a Problem for you.
Interesting is the example of the USA is in this context. In the Fifties and sixties, the top tax rate was part of the proud 91 percent, in the eighties, he fell below the mark of 70 percent. Since Ronald Reagan came to Power, was relieved of the top earners. Now at that time there were a number of exemptions and the high rates only at very high incomes. Nevertheless, the history shows, can go hand-in-hand, that a high top tax rates quite high growth.
3. The state is drowning anyway in the money
he does, but only if you get the tax revenue from their economic context. The latest tax estimate of the tax revenues of the Federal government, the länder and the municipalities amounted in this year to 804 billion euros. This is a record. So much money had the public sector is never available, which confirms, at first glance, the Thesis of the greedy state.
However, are grown with the revenues of the tasks. Today, there are more factories, farms, transport routes than in the Sixties or seventies. The prices have risen, the needs of the people have changed. Therefore, the government expenditure is usually on the gross domestic product. This so-called state-output ratio has fallen in recent years. According to a survey by the industry organization OECD countries it was in Germany recently at 43.9 percent, in the year of 1997, there were still 48,05%.
the Is much? The is little? That’s debatable. The value is not at least in a European comparison, is striking. The state of the output rate in Austria amounts to 50.3 per cent, in Denmark, 52.7 percent, and in Sweden 49.7 per cent.