Are you one of the net contributors?

Almost all Germans pay taxes, and many also pay social security contributions. But something also comes back from the state, be it child benefit, parental allowance or student loans. The IW Cologne shows who is paying and who is not.

The calculation is complicated, but redistribution works in Germany: Those who earn a lot have to give a lot too.

VMany Germans get annoyed when they see on their pay slip how many taxes and social security contributions are deducted from their wages. A lot comes together: In addition to income tax, the state demands a solidarity surcharge, the health and long-term care funds want their money, as do the pension funds and unemployment insurance. A third of the gross wage is quickly gone, and top earners never see almost half of their wages in their accounts.

Then there are the so-called indirect taxes. They are not deducted directly from the salary, but accrue as soon as you consume something. The best known indirect tax is VAT, which is added to the net amount at the end of each purchase. But the tobacco tax, the electricity tax and the alcohol tax also go into the money.

The state spends the money it collects in many places: it not only builds roads, pays teachers and soldiers, but also transfers money directly to many people. For example, child benefit, parental benefit, Hartz IV payments, pensions or student loans for schoolchildren and students come from state budgets. The social insurances in turn pay out pensions, unemployment and care allowances. Whether and how much money you end up paying is difficult to understand, especially because of the indirect taxes.

An online tool developed by Martin Beznoska from IW Cologne sheds light on the darkness. The interactive graphic is very simple: Enter your gross household income for the year at the top right (i.e. all the incomes of all household members added up). In the next few lines you write down how many people aged 14 and over and how many people under the age of 14 live in your household. With this information, the program determines your so-called needs-weighted income in the background. It makes a big difference whether you, as a childless single, can keep your salary to yourself or whether you have to share it with your partner and three children. The graph then shows what percentage of households have to get by with less money and how many can afford a higher standard of living.

Anyone who earns a total of 70,000 euros a year with their partner, but also has to feed 2 children, is right in the middle of the population (50 percent are poorer, 49 percent are richer). The graphic from IW Cologne shows below that a household with such an income of 70,000 euros with two children pays a total of 14,995 euros per year to the state and the social security funds. Conversely, 14,330 euros will flow back. In other words: whoever belongs exactly to the middle (the 50th percent) pays 665 euros a year.

54 percent of households pay more than they get

That only changes from the 46th percent onwards. Until then, households are among the net recipients. Anyone who earns less than 2625 euros gross per month as a single receives on average more from the state than they pay in. In the 47th percent, those affected become net payers.