Among the top 30 of industrialized and emerging countries Germany is almost at the very top of this ranking with regard to the burden of taxes and contributions, according to the Organisation for Economic Co-operation and Development (OECD). The tax burden in Germany is particularly high on low-income employees, whose tax and contribution payments amount to 47.3 % of labour costs (2nd rank within OECD), as well as on average-income earners. But even with regard to top-income earners, who earn at least 167 % of the average income, Germany’s tax burden is the fourth highest behind Belgium, Hungary and France.
Particularly affected, according to the OECD, are one-parent families and those in which both partners work. With regard to these people the tax and contribution burden in Germany is once more among the biggest worldwide. The situation is different with regard to single-income families. For instance, in the case of one average earner with two children the tax and contribution rate amounts to 36.4% which places Germany in a moderate tenth place as compared with other countries.
As was the case in most top-30-countries, the tax and contribution rate slightly fell in Germany last year, according to the OECD. In particular Germans with high incomes benefited from this development. It was also revealed that the tax burden starts falling again in Germany as soon as a certain level of income is reached. Thus, singles with an annual income of 63,000 Euros have to shoulder the highest burden (almost 54 %), other singles earning 110,000 Euros per year, however, pay only 50 %. The tax and social contribution rate for this latter income group is as high as for those employees earning 36,500 Euros per year. A similar tax rate pattern was also registered in Austria and Spain.
All in all the German tax and social contribution system is said to provide little incentives for both partners in a marriage to work, according to the OECD. Quite often it would be even disadvantageous for both partners to work. Thus, a couple with two children, with one partner earning 44,000 Euros (gross salary) and the other 14,500 Euros would have to pay 41.4 % (in proportion to labour costs) in taxes and contribution while the rate would amount to just 38.9%, if one of the partners earned the same amount of money alone. 