In order to be able to finance the planned debt orgy of the CDU/CSU and SPD, taxpayers will sooner or later be asked to pay more – be it through higher prices for goods and services and thus through consumption taxes, or through direct tax increases, as recently proposed by the former chancellor’s party. High earners in particular are to pay more in future. But is that really the case?
At first glance, income tax law in Germany is regulated in such a way that those who earn more have to pay tax on a higher proportion of their income. How high the tax burden is depends on the personal tax rate. In Germany, this currently applies to a taxable income of EUR 68,413 and is 42%. For married couples and civil partners who are jointly taxed, the rate is double this amount, i.e. 136,826 euros.
Since 2007, there has also been a wealth tax rate of an additional three percentage points. However, as this only applies from a taxable income of currently 277,826 euros and the number of people affected is therefore very low, this is rather negligible.
More and more people are paying the top tax rate
It is important to note that due to tax progression, you cannot simply use your gross salary as a basis for the above-mentioned threshold. The taxable income is reduced by allowances, income-related expenses or possible special expenses and pension expenses. So if you have a larger custody account and generate dividend distributions, you can quickly reach this amount through your assets.
In addition, the top tax rate only applies to the portion of income above this limit. Taxable income below this level is subject to lower rates. In the end, everyone has a personal average tax rate. Example: Anyone who earns 75,000 euros in 2024 after deducting all deductible expenses will not pay any income tax on the first few euros up to the basic tax-free allowance limit of 12,096 euros. After that, the tax rate rises to up to 42%, with the next 5,347 euros in tax zone 2 being taxed at just 14%. In this example, the average personal tax rate is around 30%.
As a rule, a single person in tax bracket 1 pays the top tax rate of 42% from a gross income of around EUR 82,000 and would therefore already be in the top 10% of income brackets. Depending on the location, however, this may not mean that such a person can actually feel rich and afford far more than an average earner, given the rents and cost of living. The classic image of private jets and luxury yachts that society likes to paint of the rich is not fulfilled.
Average rises, tax thresholds fall
In fact, the top tax rate is taking effect earlier and earlier, and the delta to the average income is continuously decreasing. According to the Federal Statistical Office, the average gross income in Germany was recently EUR 55,608. If the limit for the top tax rate of EUR 82,000 is used for comparison, this is just 1.5 times higher. The multiplier has fallen sharply since 1950 – not only because the thresholds have been continually lowered by politicians, but also because the average income has to be constantly adjusted upwards in an inflationary system.
75 years ago, the average German brought home around 3,200 Deutschmarks a year. Although the top tax rate of 95% was significantly higher than today’s income tax rate, it only applied from 250,000 Deutschmarks, which was almost 80 times the average income at the time. Only ten years later, this figure had fallen to around 20 times, by 1960 to less than 10 times and by 1980 to around four times. In the 2000s, you didn’t even have to bring home more than double the average earner to slip into the top tax rate.
| Year | Top tax rate | Limit | Multiplier |
|---|---|---|---|
| 1950 | 95 % | 127,800 euros | 79x |
| 1960 | 53 % | 56,300 euros | 18x |
| 1970 | 53 % | 56,300 euros | 8.0x |
| 1980 | 56 % | 66,500 euros | 4.0x |
| 1990 | 53 % | 61,400 euros | 3.0x |
| 2000 | 51 % | 58,600 euros | 2.0x |
| 2010 | 42 % | 52,900 euros | 1.4x |
| 2020 | 42 % | 57,000 euros | 1.2x |
| 2025 | 42 % | 68,400 euros | 1.5x |
Over the last few decades, politicians have continuously ensured that the top tax rate affects more and more people, while at the same time ideas such as the minimum wage or citizen’s income have shifted the boundaries from the bottom to the top. This has led to a compression of the “middle class” and ultimately to an equalization of all working people. Average earners are getting closer and closer to low earners, but are also being put on an almost equal footing with millionaires, because they hardly have to pay any more tax.
This is a major moral nuisance and promotes wealth inequality, as the really rich are left with more of their income in percentage and absolute terms, which they can invest profitably and thus become richer and richer in the long term. The gap is widening ever faster.
Something has to happen
In the long term, the multiplier between the average earner and the top taxpayer must increase significantly again. An increase in the exemption amounts and marginal tax rates would even benefit the lower salary brackets because their thresholds would also rise and they would have to pay less income tax. They will be relieved. The zones in which lower tax rates are paid would become broader and cover larger income brackets. The belly of the middle class would be equalized and become larger again.
At the same time, any incentive to earn more would be increased and the difference between rich and poor would be equalized. In return, the tax rates for top earners could be increased or even the exemption limits for the wealth tax could be adjusted. Mere tax orgies are not expedient and only serve to serve the actual electorate.
- Elias, Roland (Author)
Letzte Aktualisierung am 2025-04-16 at 20:30 / Affiliate Links / Bilder von der Amazon Product Advertising API
