German Businesses Head for Lower-Cost Shores

BusinessWeek ^ | 12/23/02 | Jack Ewing

[Incorrigible]

Now that Poland and the rest of Eastern Europe is part of the EU, Germans can expect to hear a "giant sucking sound" south and east.

[AD from SpringBay]

Sounds like California.

[Oldeconomybuyer]

German Tax Rates

Personal Income tax rates in Germany are calculated on the basis of a mathematical formula. For 2002, the following tax schedules are applicable:

Single Taxpayers:

" a zero tax rate on taxable income up to € 7,235
" a marginal tax rate rising form 19.9% to 23% on taxable income between € 7,236 and € 9,251
" a marginal tax rate rising from 23% to 48.5% on taxable income between € 9,252 and € 55,007
" a marginal tax rate of 48.5% on taxable income over € 55.007

Married Taxpayers:

" a zero tax rate on taxable income up to € 14,470
" a marginal tax rate rising from 19.9% to 23% on taxable income between € 14,472 and € 18,502
" a marginal tax rate rising from 23% to 48.5% on taxable income between € 18,504 and 110,014
" a marginal tax rate of 48.5% on taxable income over € 110,014

As of the year 2001, Germany has a new system for the taxation of business income. The corporate tax rate is 25%. In the case of individuals and partnerships, the general income tax rates are lowered in accordance with the above rates. In addition to this tax reduction, the German trade tax is taken into consideration in determining the income tax.

Up to the the end of the year 2000 German corporate income was taxed at 40% if the income was retained and at 30% if the income was distributed. Foreign corporations with income from German operations were subject to a tax of 40% whether or not the income was distributed.

[jalisco555]

One of Germany's main exports now is talented, ambitious young people. Go to New York, L.A., London or even Syracuse where I live and you'll find many of them. Germany is in serious trouble.

[chiefqc]

The rest of Euro countries are soon to follow on their same footsteps.

This is the result of the cradle to grave welfare.

Yes they earn big bucks so that they can pay for all these wefare items.

You only get what you pay for and those you elect.

Stop your whining, it's your choice.

[eeman]

Relative to the US, the the top tax rate of 48.5 percent is not that high. I wonder if there are other local taxes or social security taxes that are not included in this figure.

Consider: Our top federal rate is 36%. The Feds start phasing out deductions at around $160,000 per individual return. Therefore, the top rate rate really becomes around 40%. If you are unlucky enough to live in California or some other hight tax state, your marginal rate then becomes around 48-50 percent, plus all the other taxes you pay. The Germans also have a reasonably efficient health care system as a benefit of their taxes. Who are the bigger socialist? The Germans or us?

[Prodigal Son]

bump

[jalisco555]

The rest of Euro countries are soon to follow on their same footsteps.

Yep. I've met several young French people here for the same reason.

[jalisco555]

The real issue in Germany is the total lack of new private sector job creation. It isn't just taxes but the whole socialist structure which prevents new business formation, old business destruction and the kind of economic flexibility that we take for granted here.

[americanbychoice]

well, you are wrong. That is only the tax rate, add to thata healthinsurance rate (mandatory) of 15.2 %, Social security of 19.5 %, Vat of 16% on all purchases, Ecology tax of 8 % on all purchases, 80 cents fuel tax per liter, a new tax on electricity, natural gas ,etc.,etc. After all that you get to the tax rate. By the way, this is only what the worker pay,the employer is taxed as well. Would you like to explain the "free health insurance" again please? Noithing is free Hillary.

[Southack]

"Our top federal rate is 36%. The Feds start phasing out deductions at around $160,000 per individual return. Therefore, the top rate rate really becomes around 40%."

No, that's not how it works. Your top possible tax rate doesn't go UP when you phase out deductions. Deductions only LOWER your tax rate.

Also, your numbers are out of date.

Old pre-2001 U.S. Tax Code

Bush Plan

Single			Single
$0	$27,050	15%	$0	$6,000	10%
$27,050	$65,550	28%	$6,000	$27,050	15%
$65,550	$136,750	31%	$27,050	$136,750	25%
$136,750	$297,350	36%	$136,750	--	33%
$297,350	--	39.6%

[eeman]

I appreciate your explanation about the additonal taxes. If you read my post more closely, I was wondering if there were additional taxes that were not mentioned in the original post. Your post is very informative about those additonal taxes.

What I do not appreciate is your obnoxious insult. There is nothing implying that I think that we should have government run/financed healthcare healthcare or that healthcare should be "free."

[eeman]

Thank you for supplying the tax table. I respectfully diagree with your assertions about deductions, however. In the current tax scheme, itemized dections start phasing out incrementally as your income rises above 129,000. Similarly, personal exepmtions start phasing out. If you cannot use the deductions, they cannot lower your taxes. Thus you end up paying more taxes. This is equivalent to being bumped into a higher marginal rate but without telling you.

[eeman]

Please see post number 12. It was meant for you, not Southack

[americanbychoice]

The Germans also have a reasonably efficient health care system as a benefit of their taxes. Who are the bigger socialist? The Germans or us?

Healthcare is NOT a benefit of their taxes. They pay for it seperately (also their employer pays part). Then you questioned who the bigger socialists are. Just pointing you straight, no insult intented, just responding to your post. :)

[Southack]

"I respectfully diagree with your assertions about deductions, however. In the current tax scheme, itemized dections start phasing out incrementally as your income rises above 129,000. Similarly, personal exepmtions start phasing out. If you cannot use the deductions, they cannot lower your taxes. Thus you end up paying more taxes. This is equivalent to being bumped into a higher marginal rate but without telling you."

If Joe Above-Average makes $150,000 and gets taxed on every penny of it, then he pays no more than 33% of that $150,000 to the federal government.

If he has $2,000 worth of deductions, then he pays no more than 33% of $148,000 in taxes (i.e. 32.56%), a rate that is LOWER than the top bracket of 33%.

So if ALL deductions are phased out or banned, you still don't pay MORE than the top 33% (for income tax). Deductions can only LOWER your percentage below that of your official tax bracket, they do NOT raise that official percentage if they are banned.

[Southack]

"Relative to the US, the the top tax rate of 48.5 percent is not that high."

I disagree. Compare people in the U.S. earning between $55,000 and $137,000 to those in Germany. The tax rate for that bracket in the U.S. is no more than 25%. In Germany, the tax for that bracket is 48.5%.

In other words, their income tax alone is roughly DOUBLE the taxes that Americans pay.

[1rudeboy]

. . . Germans can expect to hear a "giant sucking sound" south and east.

Somebody call Ross Perot! We've found his "giant sucking sound!"

[eeman]

Yeah, there's no argument there. Looking at that table in this discussion, those German upper-middle-to-high income earners, who are by no means "rich," are truly getting screwed.

I also must admit your point (cough, cough) about phasing out deductions. For what it's worth, not related to current disucssion, the income limitations on deductions either phases out or will start phasing out by 2006 under the Bush Tax plan

[Southack]

No sweat. I'll spot you this one if you forgive my next misunderstanding.

In the spirit of Christmas, of course!