During the election campaign for the 2021 federal election, there were repeated debates about redistribution measures, for example in the form of a wealth tax, but also about further tax increases to compensate for the additional burden on the national budget caused by the Corona pandemic. However, if one takes a look at the latest study by the Institute of the German Economy, which is close to employers and was developed on behalf of the New Social Market Economy Initiative, it is mainly high earners who contribute the lion’s share of income tax revenue with their taxes. Overall, Germany has one of the highest tax rates in an OECD comparison.
According to this, a household with two people and an annual gross income of 45,500 euros belongs to the middle class. Exactly 50% of the population earns more, the other half less. However, the first 50 % together contribute only 7.3 % of the total income tax revenue. With a gross annual income of 62,000 euros, a double household already belongs to the top third in Germany. 70% of all German households earn the same or less and together contribute around 21% of total income tax.
In other words, the bottom two-thirds of the population are responsible for just one-fifth of government revenues via income tax.
The top 10 % pay 50 % of the income tax
All households with an annual gross income higher than the above-mentioned pay the remaining 30 percentage points, or 79% of the total income tax. A two-person household with 96,000 euros even belongs to the 90th percentile. The top decile provides about half of the income tax revenue.
In concrete terms, this means: The rich already bear the largest share of tax revenues, which many do not want to admit and therefore keep calling for additional burdens on the strongest shoulders.
Incidentally, income tax is the most important source of revenue for the German state, generating around 300 billion euros. One third of this goes directly into the German pension system as counter-financing.
Germany has the highest tax burden in an OECD comparison
Overall, Germany remained the top high-tax country during the pandemic. According to the latest OECD study, Germany is the country that, measured by gross income, imposes the heaviest tax burden among the 37 OECD member countries, especially on single and double-income earners. For single people without children and a gross annual income of 61,200 euros, the tax burden from taxes and social security contributions is 38.9%. Of this, 18.8 percentage points are accounted for by income tax and 20.1 percentage points by social security contributions.
Among dual earners, Germany falls back to second place, but with a tax burden of almost 30% it is still one of the countries with the highest tax rate. Only among families with a single earner is Germany not in the top group in the OECD comparison, but at just under 33% it is above the average of 24.4%.
Keyfacts:
- the strongest shoulders already pay the majority of income tax today
- the lower classes are only responsible for about 10%.
- In an OECD comparison, Germany is one of the countries with the highest tax rates.
