Does Germany really has a very high income tax rate?
The statisticians at the Organisation for Economic Cooperation and Development (OECD) have done some analysis of average salaries across various countries. Germany comes at top end of distribution, where single people pay 39.9% of earnings in income tax and social security contributions. The lowest rates are paid in Chile at 7%. These tax rates apply to single people with no children, on an average salary for their country.
However, if you are married with children in Germany, the rate drops from 39.9% to 21.3% because of generous child tax credits. Thus, the tax rate for a married couple with 2 children is even lower than similar couple in India, who is taxed at flat 30%, irrespective of marital status.
Thus, the common perception about high tax rate in Germany is not really true in every circumstance. Generous child tax credits lower your tax rate considerably. (source – www.bbc.com)
