Contributions paid by employer

6 posts in this topic

Dear TT, 

 

I am curious about the reason behind "forcing" the employer to pay half of pension and health insurance. 

 

Why not simply put the taxes on employee and let the employer pay a higher bruto? 

 

Thank you.

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Pension and health insurance are not taxes.

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It would be much more easier to compare income between countries if one wouldn’t have to take the “superbrutto” of each country into account. 

 

On the other hand, if all contributions would be paid by the employee your net income would be less than 50% of your brutto for middle class employee.

 

The only reason I can i think off is the psychological effect. But I doubt the German government thought of this when they setup the current system.   

 

 

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but it is not really that easy to compare between locales using netto alone, as what any salary boils down to is buying power.  If your net income is less than 50% of brutto it doesn't mean squat if, at the same time, your housing costs only eat up 15% of your netto or if food is particularly cheap (or expensive).  See what I mean?

 

I still can't get over family/friends in the US who ask me how much I take home (in dollars no less), when they have no earthly idea what it costs me to live here.  Yes on paper I "take home" less than I did in the US, but it's also a lot cheaper to live here so in the end I still make out well.    

 

It's *all* relative and highly context dependent.

 

and by the way, the US does something similar with social security/medicare retirement contributions:  employer pays roughly half, as does the employee.  This scheme is not unique to Germany, but I can't say I have any idea why it's set up that way.

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1 hour ago, lisa13 said:

but it is not really that easy to compare between locales using netto alone, as what any salary boils down to is buying power.  If your net income is less than 50% of brutto it doesn't mean squat if, at the same time, your housing costs only eat up 15% of your netto or if food is particularly cheap (or expensive).  See what I mean?

 

I still can't get over family/friends in the US who ask me how much I take home (in dollars no less), when they have no earthly idea what it costs me to live here.  Yes on paper I "take home" less than I did in the US, but it's also a lot cheaper to live here so in the end I still make out well.    

 

It's *all* relative and highly context dependent.

 

and by the way, the US does something similar with social security/medicare retirement contributions:  employer pays roughly half, as does the employee.  This scheme is not unique to Germany, but I can't say I have any idea why it's set up that way.

 

I agree with you that buying power is much important than the income but the current system only makes it more difficult to compare against since each country has it's own % on top of your salary with various benefits. 

 

You can compare and equivalate expenses (e.g. rent, groceries) via several sites like numbeo so it would be much more convenient to have the gross income including all benefits. It would also help comparing against different employment options (e.g. freelancer). 

 

Since the model adopted is - in my view - a small complication, then it must be a reason why it was chosen. You don't complicate things for nothing. 

 

As a side note, US has and always had a higher purchasing power than Germany. As of 2019, the average is about 5%: 

https://www.numbeo.com/cost-of-living/rankings_by_country.jsp  

 

Of course, the families fare better in Germany while the ambitious singles fare better in U.S. but it does average out. 

 

If you want to calculate for a specific individual (e.g. you), then it becomes a search adventure. 

 

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