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Politics

Hate taxes? Don't move to Germany

Alexander Pearson
April 26, 2018

You're single with no kids and thinking about working in Germany? Move and your tax burden will be 15 percentage points higher than the average among rich-income countries, according to a new study.

https://p.dw.com/p/2wkKh
Stock photo - Euronotes
Image: picture-alliance/dpa/J. Kalaene

Germany has the second-highest tax burden for single earners among high-income countries, the Organization for Economic Co-operation and Development (OECD) said on Thursday.

The news has come amid a large budget surplus in Germany and no plans under the new coalition government to drastically change personal income taxes.

Read more: German man pretends his dog is a sheep to save taxes

What the OECD found:

  • In its "Taxing Wages" report, the OECD calculated the "net personal average tax rate" (NPATR) to determine a country's tax burden. The NPATR equals the sum of personal income tax plus social security contributions minus cash benefits as a percentage of gross earnings.
  • Single earners in Germany who have no children had the second-highest NPATR in the OECD at 39.9 percent.
  • Belgium took the top spot with a NPATR of 40.5 percent, while Chile had the lowest rate with 7 percent. The OECD average was 25.5 percent.
  • German earners whose spouse didn't work and who had two children had an NPATR of 21.7 percent.
  • Turkey had the highest one-earner family NPATR at 25.9 percent, while one-earner families in Poland actually earned money from the government with a negative NPATR of -4.8. The OECD average for this category was 14 percent.

Read more: Germany expects significantly higher tax revenues

Should Germany tax sugar?

Coalition to stay on course: German Chancellor Angela Merkel's conservatives and the Social Democrats, which formed a new government in March, have not planned major changes to Germany's income taxes. The biggest shake-up in their coalition agreement was the staged reduction of the "Solidarity Tax" used to help the former East Germany rebuild its economy after reunification.

Germany's boom: In 2017, Germany posted a budget surplus of €36.6 billion ($44.9 billion) amid strong economic growth and record low unemployment.

Expert calls for tax cuts: The chairman of the German Council of Economic Experts, Christoph Schmidt, has called on the German government to take advantage of the country's budget surplus to cut taxes rather than increase spending. He told weekly magazine FOCUS in mid-April: "It's problematic that the government places a higher priority on new spending programs than long due [tax] relief."

Read more: Germans can save taxes by biking to work