German Taxes: Give it to me straight.

A comparison of US and DE tax rates.

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zacharytelschow
My wife and I are seriously considering moving to Germany I'm looking for a realistic view of typical German tax rates. I'm looking for any tax that will reduce my take home pay or cost me more when I shop. For instance, I know the VAT in Germany is high compared to US sales tax. My wife's family has also mentioned that their TV and garbage taxes are high. Obviously, my wife's relatives would ideally be great sources of information, but talking about taxes at length with them is futile - they're practically socialists and conversations quickly turn to them summarizing all the great government benefits and justifying taxes. I don't care to hear about government benefits, I just want the bottom line.

Here are things as they stand in the greater Chicago, IL area:
Marginal federal income tax rate: 25%
State income tax rate: 5%
FICA (SS, Medicare, etc): 7.65%
Total marginal tax rate on income: 37.65%

Sales tax: 6.75%
Property taxes: $200/month (What equates to a city or local tax)
Gas taxes: marginal ($0.30/gallon, I believe)
Car registration: $90/year

Typical utility bill (I realize this isn't a tax, but I know energy is heavily taxes in the EU):
Gas: $60/month
Electric: $60/month
(These are year round averages for our 1600 sq ft town home).

I'm trying to figure out if my wife and I could afford a similar standard of living to what we have now if we were to move to Germany. Any information anyone can provide would be highly appreciated. If there's any taxes you think I missed here in the US, please add those as well though I think I've covered the major ones.

Thanks for all your help!
zwiebelfisch
The significant thing is income tax, and that is too complex to describe simply in these terms. It depends how much you and your wife expect to earn, and how you chose your tax bands.

As wikipedia (http://en.wikipedia.org/wiki/Taxation_in_Germany) says: The rate of income tax in Germany ranges from 0% to 45%

You also have solidarity tax and mandatory healthcare.

But of course the bottom line is not how much tax you pay, but what the takehome will be, where you intend to live, what your major costs are, and how you define standard of living. Overall, you will probably earn less, and almost certainly pay much higher taxes, at least as a proportion of income. You stand a reasonable chance of having an equal or better standard of living.

Id also say that if you have a problem with relatives being socialists, then Germany may not be the place for you
Bipa
You stand a reasonable chance of having an equal or better standard of living.
I was nodding my head in agreement until I hit the above sentence. The man and his wife are in a 1600 sq. foot home, which is approximately 148 square meters. They are very likely going to have to pay a lot more to stand a reasonable chance of having an equal standard of living in any large German city. Or else they may have to downsize or move out into the countryside and lower their current standard of living to make life in Germany affordable.
Freising
Comparing tax rates is useless. The real outcome depends on how the assessment base for a tax is defined. You would have to take into account, what kind of costs are deductible, how high those costs are, and so on...

A comparison isn´t impossible, but it would be complicated, involve tax experts in both countries and be only valid for a very specifically defined group of people. It´s quite possible that a married couple with children, husband is an employee, wife is a stay at home mom, no other income would be better of in germany (although the tax rate might look higher), while a single male, self employed might have a better life in the US. Or maybe it´s the other way ´round... I wouldnt want to make any predictions.
Conquistador
What Freising posted, plus do you have any idea what you and your wife would make in Germany pre-tax? I wouldn't assume that your salaries or expenses would be the same in both countries, and expenses are usually a bigger factor than differences in tax rates.

As far as utilities go, the last time I compared these costs (2006) only electricity was significantly more expensive here. No idea if that is still the case, or if that would apply to someone in IL (I wasn't living there). Property taxes are significantly lower here.
lilplatinum
I was nodding my head in agreement until I hit the above sentence. The man and his wife are in a 1600 sq. foot home, which is approximately 148 square meters. They are very likely going to have to pay a lot more to stand a reasonable chance of having an equal standard of living in any large German city.
Depends where he lives, if hes moving from a Kentucky to Hamburg then yeah. If hes moving from Manhattan to Berlin, probably not.
CincyInDE
...
Id also say that if you have a problem with relatives being socialists, then Germany may not be the place for you
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swimmer
Property taxes are significantly lower here.
Yeh, I see property as under-taxed here.

One thing you have to consider if you drive your life choices from tax is that taxes change (and usually not downwards in this day and age). I can certainly see land tax increasing here (just low-hanging fruit - tiny in relation to other asset forms and easy to pin down). And, of course, 2009 laws on healthcare insurance increased costs for quite a lot of immigrants. The list probably goes on.

There is no "garbage tax" here is there? We just pay for someone to take it away.

I'd agree the others. On managing your money, it's cost of living that matters most in an emigration choice. In the big picture of immigration, I tend not to few a couple of k cash either way as any big deal now, particularly when you bear in mind that higher tax tends to equal better social benefits (not only money but better infrastructure etc). There are far bigger non-cash gains and costs really.
Bipa
Depends where he lives, if hes moving from a Kentucky to Hamburg then yeah. If hes moving from Manhattan to Berlin, probably not.
He indicated the greater Chicago area.

House owners do pay a garbage tax in addition to pay per use.
MrNosey
There is no "garbage tax" here is there? We just pay for someone to take it away.
'Garbage collection tax' vs 'Refuse collection charge' .... tomato, tomAto, potato, potAto
expatsayswhat
In doing my own research I found this document via Google which is one of the best summaries I've found for expats moving to Germany:

http://www.deloitte.com/assets/Dcom-Germany/Local%20Assets/Documents/04_Steuerberatung/2010/final_WL_2010%20(2).pdf
Katrina
My wife and I are seriously considering moving to Germany I'm looking for a realistic view of typical German tax rates. I'm looking for any tax that will reduce my take home pay or cost me more when I shop.
To be honest, it actually reads like this:

My wife is seriously considering moving to Germany I'm looking for a good excuse not to. I'm looking for any way that will reduce my wife's arguments or cost me less strife when I say no.
Coming here is about so much more than money - although it has to be said, I did come here for money. And career opportunities. And beer.

While getting a fair picture is fair enough, you don't exactly come across as someone who wants to actually come here.
If this impression is unfair, then apologies.
lilplatinum
It actually reads like someone who is asking for an honest assessment of what his financial situation will be, which can be difficult here because when discussing taxes here you often get people arguing shit like "Well mandatory pension contributions aren't taxes", a distinction that is fairly irrelevant as mandatory paycheck reductions are mandatory paycheck reductions.
holyloch
BULF: Not enough data other than a rough guess of 'yes your taxes will be higher'.
Are you US MIL RET?
Are you GS retired?
I believe these items are not taxed by Germany (treaty), though they will likely be used to set your tax rate.
Will you have a job here and if so who with?
Do you have healthcare? How will you maintain it here?
All of these things impact taxes and take home pay.
lilplatinum
Bottom line, without knowing your income there and prospective income here (the 25% tax brackets like between 30something and 80something in USA) can't really tell your raw numbers.

Long story short, your going to see significantly less of your paycheck here and pay a 19% vat on everything. As advised your best bet is to consult an accountant as all of us are in different circumstances and a lot of things can affect our takehome/tax situations.
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