Of monsters and presidents | 30 comments (30 topical, editorial, 0 hidden)

Re: Of monsters and presidents (none / 0)

But if 40% tax is rather progressive depends on other questions.
Is capital income taxes by the personal income rate, or is there a special capital income tax? Is there an additional pay roll tax, which is at least partially as well used for redistribution, or not? What's the tax for enterprises? Are there additional wealth taxes or not?

For people with an income close to, but below the health insurance cap, the current marginal tax and social insurance rate in Germany is more than 73%, and before Schroeder's income tax cuts, you could have more than 80% marginal rate (in a narrow but densely populated income band).

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 09:36:31 AM EST
[ Parent ]

Re: Of monsters and presidents (none / 1)

If the band is sufficiently narrow, then talking about marginal tax rates becomes largely a red herring. To take the extreme example, it is possible to imagine a 200 % marginal tax in a band precisely one € wide (I know that this example is ridiculous, but I hope it illustrates the point). The bandwidth is needed if you want to make an apples-to-apples comparison across borders (along with much else, as noted upthread).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 20th, 2008 at 04:25:46 PM EST
[ Parent ]

Re: Of monsters and presidents (none / 0)

The band is narrow in case of single income households. In case of double income households it can be large, because income tax billing can be done together for married people, while social insurances are bound to the working place.
That means if your spouse earns significantly more than the health insurance cap, for your part of the household income the marginal tax rate maybe (depending on how much your spouse is above the cap) from the first Euro to the cap (43.200 EUR) at this marginal rate.
For the calculation of the marginal tax rate I have included employer's contribution to the social insurances.

As said above, the cap is not simply a cap. You can leave the public health insurance if you earn that much, which is way cheaper. So a single with gross income of 43201 EUR, can end up with 200 EUR more each month than a person with an income of 43199 EUR.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 05:16:43 PM EST
[ Parent ]

Re: Of monsters and presidents (none / 0)

With the cap and private insurance are different values, I just found out. The cap indeed is 43200 EUR, but the possibility to leave the public health insurance system only starts at 48150 Eur.
However, I think the general point is clear.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 05:45:56 PM EST
[ Parent ]

Re: Of monsters and presidents (none / 0)

I'm not sure I understand. What does the cap do?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 21st, 2008 at 06:28:25 AM EST
[ Parent ]

Re: Of monsters and presidents (none / 1)

Above a certain income, health insurance payments are fixed. It used to be identical with the limit above which you could choose private health insurance, but the Schröder government raised the latter.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Wed May 21st, 2008 at 07:31:25 AM EST
[ Parent ]

Re: Of monsters and presidents (none / 0)

What is the goal of this exercise? Do you mean to test if one could say that even if Slovenia is different from the flat-tax countries, relative to Germany, Slovenia's tax rates are still very low?

If so, I ask you to define me the inputs I should look up in the form of a formula.

Now I can say the following [pdf!]:

income tax: steps are 16%-27%-41%, the last kicking in above €13.600
corporate tax: 22% (annual 1% reductions ongoing)
tax on dividends and interest: 20% (raised 5% recently)
capital gains tax: 20%, reducing to zero for 20-year idle holdings
payroll tax: steps are 0%-1.1%-2.3%-4.4%, the last kicks in above €3.129.69 (than halved from one year earlier)
social security contributions, total: employee's part 22.1%, employer's part 16.1%
property tax: vacant building land is locally taxed, buildings have progressive taxes, among these the rate for dwellings is 0.1-1.0%, for business 0.15-1.25%, idle business premises 50%(!), rest/recreation facilities 0.2-1.5%. But there are lots of exemptions that appear to favour small business.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Wed May 21st, 2008 at 07:23:01 AM EST
[ Parent ]

Re: Of monsters and presidents (none / 0)

Not very low, but significantly lower, btw. originally I wanted to say, that other forms of taxes do play a significant role to judge about the general progressiveness of the system. The numbers you posted just now, affirm a mixed picture, but with generally lower taxes than in Germany.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Wed May 21st, 2008 at 08:01:13 AM EST
[ Parent ]

Re: Of monsters and presidents (none / 0)

Generally lower, but, when compared to the flat-taxers, is it significantly lower?

I note however that Slovenia is a less obvious argument as I originally thought: the present income tax reflects tax cuts by current right-wing government, and even if those were less 'ambitious' than original proposals, the biggest gift to the rich was the elimination of a top income tax rate of 50%.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Wed May 21st, 2008 at 08:30:28 AM EST
[ Parent ]

Of monsters and presidents | 30 comments (30 topical, 0 editorial, 0 hidden)

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