Exploring Income Realities: Germany, Social Support
By Dr Deler Langenderg
Are you dreaming of living in Germany? Wondering if earning a hefty annual income of €70,000 makes you ‘rich’? Let’s dive into the world of income disparities to shed some light on the subject.
Working: Many aspire to live here for its economic stability and opportunities. Earning €70,000 a year is indeed a comfortable income. But it’s crucial to understand that factors like taxes, cost of living, and personal expenses can significantly impact your wealth. Germany boasts excellent healthcare and education systems, but they come at a price. Taxes are progressive, meaning higher earners pay more. While the standard of living is high, it’s vital to manage finances wisely.
Not Working: Social Support (Welfare): Not everyone in Germany earns a high income. There’s a well-established social support system for those in need. People facing financial hardships can receive assistance for their basic needs, ensuring a safety net for vulnerable individuals and families. It’s a crucial aspect of Germany’s social welfare model.
Examples:
In Berlin, the tax rates for the year 2023 in tax class 1 without church tax are as follows:
Income tax: 20.41% on the taxable income.
Solidarity surcharge: 5.5% of the income tax.
Gross annual salary: 70,000 euros
Income tax (20.41% of 70,000 euros): 14,287 euros
Solidarity surcharge (5.5% of income tax): 785.79 euros
70,000 euros – 14,287 euros – 785.79 euros – 14,000 euros = 40,927.21 euros
For living, The following deductions are applied:
12 months * 1200 euros = 14,400 euros for Rent contributions
12 months * 200 euros = 2,400 euros for health insurance contributions
12 months * 100 euros = 1,200 euros for other insurance contributions
6,000 euros for childcare costs
4,200 euros for the actual costs of car maintenance, insurance, and fuel
The taxable income is the gross income minus the deductions. In this case, the taxable income is 12,727.21 euros. I did not calculate clothes, Cinemas, Holidays, Hobbies, extra Pharmacy payments.
Let’s see the social system:
The total benefit for a person in Berlin is about 800 euros per month.
Included these all for free: Social assistance recipients in Germany receive benefits for insurance, accommodation, and clothing. They also receive benefits for health insurance, long-term care insurance, pension insurance, and unemployment insurance. The amount of these benefits is dependent on the cost of living.
Total: 800*12 months= 9600 euro
You are allowed to work on a 400 euro basis, which is 4800 euro =14400 euro.
We are not a worker-friendly country; and it’s a socialism.
