Income tax stands at 42 percent for those earning a little over €52,000. Social security payments, which include pension, health, unemployment and nursing care insurance, are also deducted from pay cheques. VAT meanwhile stands at 19 percent.
Germany’s main opposition party, the SPD has suggested it will raise taxes if it wins next month’s elections increasing the top rate of income tax to 49 percent.
But Chancellor Angela Merkel told an election rally on Thursday: “We shouldn’t burden those who are successful with a conversation about envy, but rather encourage them so that it’s better for us all.”
Is Germany’s strong economy a sign that it has got its tax rates right, striking a perfect balance between wealth distribution and wealth creation? Or are the high rates holding back an economy which would be even stronger with less tax?
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