How to survive when paying 45% on income tax

Hi all. I'm a recently graduated (from university) 25 year old who has a ok paying job here in America. With our taxes being way lower, how is it possible to survive in Germany with like a 45% tax on your income? That is just mind boggling to me. I ask because I want to move over there in about 6 or 7 months, but it seems like a high paying job is needed.

higher gross salaries for graduates. compare net to net, not gross to gross. then compare cost of living. Many things will be cheaper hear (I believe most groceries and alcohol (for certain) are cheaper here than in North America. Rent may be cheaper depending on where you come from and where you are moving to.

US is much cheaper than Germany in clothing, rent and food.

There are MANY parts of the US that are far more expensive than even Munich (which is expensive for German standarsd) for rent. Take the Bay area or New York, for examples. Generalisations aren't necessarily helpful. Germany is cheaper than Canada for most groceries.

some groceries are cheaper here not all, fresh veggies are certainly not, but I don't think any of us are suffering here. I am not sure of the salaries in the US, but I know I make more here than in Canada, and still with the higher taxes and medical insurance costs (as we don't pay that in Canada) and cheaper rents from where I am from, I still do have a good quality of life.
Its looking at the big picture, living in Europe for a time being, meeting people, travelling, sitting in beergartens, or never trying something new, and staying where you are and always wonder.
Life is a risk, would be the same risk if you moved from one coast to the other coast.

most importantly beer is cheaper here. And cocktails actually contain alcohol. lots of alcohol. ouch.

I know my answer is trite, but wine and flowers are so much cheaper here than in the U.S . I don't have to spend so much of my disposable income to travel from the U.S to Europe since I'm already here .

The tax here is fucking brutal but if you decide you want to be here then it's the price you pay sadly.

I don't really live in an expensive city here in America. The population of the city where I live is probably about 600,000. I guess it's average living expenses based on where I live here. I mean, I'm getting sick of prices going up here in the US, but then I looked at cost of living in Europe (including taxes) and started counting my blessings. I really do plan on moving over in about 6 months, but I guess I'll need to find a pretty decent job though.

many worries make ulcer.
do not move.
stay where you are.

Well, I live in Eugene, OR. I earn about the same gross salary but take home substantially more net. Our grocery bill per week is a lot cheaper. fuel is cheaper and housing is, of course, much cheaper. We are basically much much better off than we were in Munich.

However, if I had lived in, say Augsburg (69 km NW of Munich), then I would have been much better off too... If you are worried about costs of living then don't live in the city.

The lifestyle is different here. People don't always aspire to own their own home, and seem to accept to live in a rented apartment all or most of their lives. Many people don't have cars (you don't really need one in Munich). Shopping is not so much of a recreational activity. It IS extremely expensive to live here, but you learn to live without credit, be frugal, and if you're lucky do some travelling. It's good to have your eyes open coming here, because it's unbelievably expensive - so much more so for Canucks, who also have to get used to paying for health care. But it's a great experience, and if you're young, you have nothing to lose by coming here. You can always go back and make the big bucks later

as mentioned by others, you need to be very cautious about a simple comparison. There are many lifestyle and, what economists call, structural differences between (most of) EU-land and the US. Canada is something of a mix of the two.

anyway, the big differences you will find are:
Cars - in the US you *need* one to live (in 95% of the country); in EU-land, you can easily live without one, and often your employer will pay for it, or your petrol costs.

University Education - in the US, most of the university costs are paid by the student with loans (or family funding) so people typically have a huge debt load upon graduation; in most of EU-land, university costs are almost entirely covered by the state (from part of that 50% tax people rant about).

Health Care - this is a complex topic, and I am no expert. so do your own research.

Social Wellfare - this is a controversial topic. will only say that the large amounts of state funds spent on public wellfare in EU-land are often accompanied by the side benefits of less crime and a generally less violent society / daily life. oh, and also no need for gated communities and segregated poverty.

but of course, the big impact you would see in your daily routine and finances is that in the US, you need to drive everywhere everyday. that is a huge part of the structural differences (i.e. "structural" because it is not possible to quickly change the roads, housing and infrastructure of the US, which is based on the premise that everyone has a car and enjoys driving). And if you look at how much you truely spend on your car (gas, insurance, repairs, interest on the loan, road taxes, care and maintenace, parking, tolls, speeding tickets, legal fees for that occasional DUI, etc.), I think you would be a bit shocked.

oh and to turn your question around: if it is so cheap to live in the US, why does the average american have such a high level of debt? Most europeans are debt free and have personal savings / cash in the bank. (I'm speaking mostly of credit card / consumer debt - not investment debt like a house mortgage.)

i think, this is because standard deviation of income distribution in US is very high, which means rich is very rich and poor is very poor. Middle class is small.

Wanna swap?

that's actually a funny issue. i know so many germans who say they are debt-free, but they don't count their negative balance in their checking accounts, where they have to use the "depot" allotted to them by the bank. go into that "money cushion" and you pay around 14% interest (if not more) when you pay it back.

One of the UK guys on this board moved to Chicago at the start of the year and says everything is "cheap as chips"! Which kinda implies bad news the other way around.

Food, clothing, houses, cars - they all sound cheaper in the USA. Then again even if they were giving that stuff away free I think I would still stay here :-)

Using a "dispo" ie overdrawn on your current account for long term credit is nuts.
Most people I know might be overdrawn for a short while but get back in credit as soon as possible.

if i copare quality of life between Germany and the UK for people of my age and job etc, it seems miles better here.

Every day I see Germans buying high-quality foods, driving expensive cars and spending money in cafes and restaurants. Six of the top 25 cities in the Quality of Life rankings are in Germany; none are in America. Germany has highly efficient and good value public transportation and other public services. So forget about the tax rate and focus on what you see in the streets. As a graduate, there is no reason why you won't be earning enough to enjoy the same high standard of living as the Germans. Also bear in mind that a lot of the "taxes" are in fact your healthcare and pension.

Huh??? Where Where Where? Please spill the beans? (sorry for the bad pun).

@JE: I think this topic has been done to death, but here's a clue: not in Aldi. Try your friendly neighbourhood store or the local market. Are you actually suggesting that food is of a higher standard in America or Britain than it is in Germany?

Moi?

I am going to come over there because I want to try somthing new, and I have always wanted to move to Germany. The only rough thing for me is that my job pays for all of my healthcare and dentistry, my fairly nice car is paid off, and I don't even have to pay my car insurance for the next year (graduation gift). So life will end up being a bit more expensive for me in Germany. Oh well though, its still not going to stop me from wanting to come over there.

you'll also get around 6 weeks paid holiday a year. yup, that is 30 days. my colleagues here get 2 additional ones when they turn 39!

for me, the move here has been great since the Euro came into play. i have put a huge dent in my student loan debt, still managed a new macbook and trips to Peru, Thailand, Scotland and Portugal (+ USA twice, not to mention long weekend trips to Hamburg and Paris) these last 3 years.

EDIT: I should add, when there were DMs, I was struggling to pay my monthly student loan repayment minimum.

Errrrm, you do know that there is public health care in Europe.
As I expect you are going to live in one of Germny's larger cities you are not going to need a car.
The money you thus save can go on other things.

Slightly sweeping statement methinks.

A young person NEEDS a car if they live and work in one of Germany's larger cities?

Beer is cheaper here.
Is rent cheaper here? Dunno. Depends where you live.
Is food cheaper here? Dunno, depends what you wanna eat.
Are consumer products cheaper here? No. Not really atall, no.

If you come here, you'll pay a fortune in tax, but rest all warm and fluffy in the knowledge that your money is being put to good use by the government. Oh, no, wait a minute, I'm clearly suffering from "writing the bloody opposite of what I mean " syndrome again. oops! I meant, you'll pay a fortune in tax, and see it completely wasted by idiotic bureaucracy. Thats better.
If you are driven by money, you'd be insane to work in Germany (unless you can get away with avoiding their taxes). For money, go to Dubai or some other desert shithole funded by oil arabs. If you like cycling and lakes, then apparently they're great here, though obviously cycling and lakes do actually exist in other places.

All about the beer for me personally. I try not to think about how much less money I take home here, just makes you want to vomit.

No need for a car. For the rare times you need one you can rent a car! In all my time here in the last 8 years, Frankfurt and Hamburg, I've never needed a car and I've gotten around no problem.

Car depends on where you live. If you utterly detest city life, and need to live somewhere near green stuff, and with 3 miles of personal space at all times, then you'll find public transport not quite as wonderful of course.

I am sure many people can do just dandy without a car - just saying it kinda might depend on your lifestyle. You could stick me in central Tokyo but I would still wanna car or motorbike. Horses for courses.

For instance I would find it much easier to live without beer than without transport. This would be a living death I think for some others.

Yes but that's a lifestyle choice then JE.
You can cut your cost of hosuing right down in German cities if you decide to share a flat for example as people do.

I would love a car, but parking is hell, so its just not worth the pain... my monthly MVV card gets me where I need to go.
And I come from a place where you need a car, as the public transport sucks.

Naturlich.

EVERYTHING is a lifestyle choice. The food you eat, the alcohol you drink, the people you shag, the place you live, the place you work.

Some people spend their money on fags and drugs, others spend it on fly fishing and flower arranging.

Didnae work.

I'm not sure its fair to say that an employer wil 'often' pay for a car


why not just say Germans instead of Europeans. Plenty of Brits are in debt


theres a limit how long everyone wants to live a 'studenty' life though. Obviously its cheaper without a car, but its very nice to have a car - I don't buy into this 'you can always hire one' way of thinking

Depends what things are importnt to you.
If you live and work in inner Munich it might be nice to have a car.
But I'd say it was nicer to have at least EUR 300 more in your pockt every month.

MT. If I lived in Munich, I would not have a car (for everyday use). I would have an "oldtimer" on summer plates, limited mileage and just us it at the weekends. Live in Munich and not car is required (according to the 15 or so people I know there that hire when they need to, (or ask to borrow my car when they have something bigish to shift )

(by the way, I would have and Austin Healey in blue and cream)!!

As for the income tax question, open your own business, have enough customers (from abroad if poss) to generate enough income to keep the taxman happy and keep any major amounts of dosh off-shore (Jersey Isles, Caymans etc, which will be where your main customer base is to enable you to claim back most of the tax that is charged)

We live in the sticks so car is #1 essential, but I know my niece and nephew over here - when they turned 17 - first thing they wanted was their own car, and would have gladly given up beer, fags, sex and food to get their own car. Still took 'em a couple of years each to get one of course.

Funnily enough city life can be fun, but I reckon if I lived in the city I would be even keener to get a car to escape sometimes.

This is called tax evasion. Pure and simple. No ifs, no buts, no "my mate says it's kosher". It's tax evasion and I have to say that Germany is probably the #1 country in the world you DO NOT wanna play this game of russian roulette.

guess it depends on where you live then, I have a nice place with a pool, and a large park outside my front door, many nice cafes and beergartens and am a 5min bike ride to the Chinese Tower(10 coming back up the hill) and 10min Ubahn to Hauptbahnhof, but I am not living in an are of only appartments row after row. I would go crazy if I lived in the city center too.

When people are considering prices in the US compared to Europe, you should probably also take into consideration that the exchange rate between the euro and the dollar is at all time highs at the moment. This makes things in the US seem very cheap to Europeans, and stuff in Europe very expensive for Americans..

America has low taxes, but you notice it too. I'm not saying I totally agree with the socialist type taxing they do over here, but I certainly prefer it to the way things are done in the US. Here you can be sure that if you lose your job you will get great unemployment benefits, that you can't just get fired for no reason and without compensation, and that you will most definitely be covered if you get sick. Further to that, if you're not single you'll be in a much better tax situation. Benefits for having a family in Germany are surely bigger than in the US. Further to that, there is very low crime over here, and basically no one is living in poverty.

These things are worth more than a few hundred dollars more in your pay every month in my opinion, especially if you are earning good money anyway.

I read that beer is cheaper here by several people...I find that facinating. Here compared to midwest U.S. micro-brews...midwest micro-brews are cheaper...easily.

The variety in beer is one thing I REALLY miss...not that I'm complaining about the beer, I just find it wrong for someone to say the beer is cheaper here, it's not.

Ok so here's the thing.

In Germany, my taxes are actually LESS than what I paid in the USA. How do you figure? Easy.

In the US, I paid:

Income tax

Then after I was paid, I was paying:

Luxury tax
gas tax
sales tax (on everything - including groceries)
property tax

Then, I had to provide my own health insurance costs, my own retirement (in addition to what I was already paying for medicare and social security) and still provide enough left over to do whatever else I wanted as far as purchase.

Here In Germany, that 45% income tax covers:

Income tax
Health insurance
Pension

There is no tax on food.

There is a luxury tax and a sales tax on some items. However, lots of those "luxury" items you don't necessarily need so you can avoid them. Ex. Cars (already mentioned), boats, etc. In addition, my experience is that the flats are cheaper - your "extra" expenses are already included in your rent (unlike in the states.) So, instead of paying rent, then heat, then water, etc. You pay rent of say 500, but that includes your heat, water, garbage, and in some areas your electric. (Phones are always extra.)

In the end, 45% SOUNDS like alot - but - for me at least - I'm paying less of my income to taxes in Germany than I was in the states (where taxes were paid on already taxed things.)

~Rose

Yeah there is actually, and it is 7% of groceries and at restaurants etc it is 19%. Except it is already included in the price tag, but there is a tax (Mehrwertsteuer)!

It would make it easier if you used the correct terminology. Income tax by definition is income tax and covers none of the itims you have mentioned. And indeed the top rate for income tax alone is 45% including Solidaritaetszuschlag.

Where did you get that from? VAT (Mehrwertsteuer) on food is 7%.

Same thing in Germany. Just think of petrol. You pay Mehrwertsteuer (VAT) on Mineraloelsteuer (fuel tax).

The top rate of income tax alone is indeed 45% but if you are paying that you are a rich twunt anyway and probably an explotative boss that wants shooting.
Most "normal unmarried people would pay about 45% total deuctions on their salary.

I am sure you will be glad to hear that rich twunts do not pay a much greater share of total deductions on their salary than normal unmarried people because health insurance and pension contributions are capped so they are not paying much else but income tax. It’s the people in the middle who get the worst deal.

in pennsylvania we don't pay sales tax on food and clothes. and compared to my hometown, mannheim seems to be more expensive in general but maybe it's me.

Why don't you just do everyone a favour, including yourself, and just go and live somewhere that is run by communists? You'll be well happy, comrade. "if you are paying tax, then you are rich and deserve too". What a load of fucking arse. Tax the fucking gays more I say, they seem to have plenty of disposable income -is that not fair? Thats hte fucking basis of loads of your bullshit; have money, deserve to pay higher tax rates. impossible to believe people can still have such a massive void in their comprehension of the world, and in particular, how the concept of "percentages" works.
Fucking lefties.