February 1, 2010

The Social Net

I thought I'd write about Germany today, although I haven't done any actual research so don't quote me or do any life planning based on this post.

The tax and social insurance rates are really high in Germany.

Income tax is fairly whopping. There are also various special taxes such as church tax and subsidizing the East Germans (which we now can't get rid of because they are a big voting block and keep voting for the free loser money, excuse me, re-integration money), as well as paying off various debts of shame accrued by the mostly dead grandparents of the current working generation.

Not to mention a popular problem faced by other countries: Keeping huge companies alive whose executives may be greedy, souless morons but employ a lot of people.

Then there's VAT tax, which is like 19% or something crazy like that and applies to EVERYthing you buy, including services, so if you want to redo your bathroom you need to budget an extra 20%.

I could go on but suffiice it to say that things are more expensive and salaries tend to be lower.

The social net is stronger, however. For example, parents get a monthly sum to help raise the future taxpayers of the Fatherland. Kindergarten (if you get a spot) is free. And there is very generous unemployment insurance to keep people off the streets... don't quote me but I believe it's up to two years with re-training if you qualify.

Now, here's the interesting thing. If you're unemployed you don't just get to sit home drinking beers and collecting your check. You have to show you're looking for work and you may be expected to retrain in a field that is in demand. Sure, an expert in bureaucracy can drag it out and maximize time off and/or free training, but the bottom line is you gotta shake your tail if you want the cash.

They want you back at work, not at home watching reruns. The system helps those who help themselves and those that don't help themselves can bite me... I mean, the system.

I think that's kind of smart. Of course, I hate bureacracy and jumping through hoops so it all sounds mega-annoying, but it serves the dual purpose of making unemployment undesirable while giving working families a longer lifeline before they lose their homes.

A good social network does more than just hand out cash. It does so responsibly and treats social problems from several angles.

Anyway, it's not perfect and I could write for hours about various problems for working families (like school getting out at noon), but there are fewer people on the streets in Germany than in countries with a weaker social net and the standard of living is still pretty high.

Isn't that the job of a social net?

And Solipsist, I have not gone all Teutonic!


  1. Wouldn't it be nice if it was perfectly well-rounded and everything was great instead of just a part of it??? Well, that wouldn't be life, I guess.

  2. "The problem with socialism is you eventually run out of other peoples money." Margaret Thatcher.

  3. School gets out at noon? What time does it start?
    I loved reading this. I know nothing of how other countries are run.

  4. BV - Yes, and I'd go live there.

    Maven - So true, although these days that's also the problem with capitalism and democracy.

    Tracie -Thanks! Although I probably got it all wrong. Ralf cringes when I write about Germany.

  5. You mean other countries have got this better figured out than us?! Okay, not perfectly, but a start!

  6. Interesting. I always assumed that in socialized contries everything was dirt cheap and free, but I guess they have to make up for the free stuff somewhere.

  7. We have no particular gripe about making people work for benefits--or retrain or whatever. We only have a problem when governments start imposing firm "lifetime limits" on benefits. Those sound good as soundbites, but they don't take into account the real world.

    As for the "teutonic" comment: Have you seen your hair?

  8. Very interesting.

    I would probably have to retrain as a tax collector.


  9. Why can't we get it right?? Oh yeah...capitalism. I just don't understand wanting to maintain a system that promotes so many fucking problems that can be PREVENTED. I do not want to live in fear of the desperate.

    Great post.

  10. Hmmm, if only we could learn from others.

  11. I didn't know taxes were so high here, but if it helps to keep people off the street, we will pay. You are right, we don't see homeless here nearly as much as some of the poorer countries in Europe.

  12. I actually think a lot of what you have said wrong- sorry!
    For instance- that reintegration tax? We pay it too. Everyone with a job does, not just West Germans! My sales tax in NY was 9% when I left- the 19% VAT doesn't seem that bad, when you consider that it is one of the things funding the public health option and the rest of the social system. Our American health insurance costs more than the German, which I would love to have, except we make too much for Germany to allow us to opt into it.
    The Church tax is voluntary- but yes, I think that is high. It's the only tax I know of in Germany which has an income cap that we haven't (and never will unless we win a lottery) surpass.
    Our public kitas aren't free: they are also income dependent, but we also have spaces for any child three or very and any child under whose mother works (or, like me, takes language/ integration/return to work courses).
    Our taxes are higher here, but we think we get real return on them and we are happy at the mix.
    In the US you are also required to look for work when collecting benefits. Just like here, people walk in to a place and ask to have that card signed. Difference is, here if one loses a job (and can't get a decent one because of, say the discrimination against the 50+, or women of child bearing years), one's children still have food, clothing, health insurance, a roof and the ability to continue in their schools and go to university. That's generally not true in the US.
    I like the German system in very many ways and certainly the taxes are not pasrt of the issues I have with Germany.

  13. And, the VAT- you can get that waived on certain renovations- your contractor should know that. And renovations are also tax deductible! Many things deductible here that aren't in the US. It's a real policy decision to not have personal mortgage tax deduction, but to allow investment mortgage deduction: it increases investment and keeps housing costs lower. As does a high VAT- decrease consumption, I mean. Not a bad concept. I also like the tax on fuels which results in a great public transportation system that allows one to live without private transport. And so on:).

  14. Um... G, I think you're actually agreeing with me.

  15. I didn't think so? Perhaps because I felt that you were saying the taxes were too high while I think that they aren't, because I feel as if I am getting value for money?
    Maybe I read something into your tone because I have family members who are always whining about tax rates in the US, where our rate was about half of what we pay here. Otherwise, it's great if we agree:)and I'm sorry that I misinterpreted.
    Also, all the schools I have looked at here (and we are switching Thing1 on Monday) are ganz tag schules: the kids get out at 3:45 which I think is too long: they are pretty exhausted at the end of the day. But it's handy for those who work, etc.

  16. Very interesting discussion.
    As a German who has moved and settled in the US, I find it interesting that the US seems so unwilling to look at the experiences of other countries (recent Healthcare debate being a perfect example)-- instead of learning from others, they usually just decry it as "socialist", not realizing that captalism is very much at work in Europe too!

    When German friends and relatives visit me here in the US, I've heard more than once: "The US is a great country (to visit or live in for a year), but I would not want to raise a family and grow old there -- too risky to end up at the bottom because of the lack of a social net. Can't live in a country where getting sick or losing my job could cost me everything!"

  17. I don't pay the church tax. :) Fine for now but if I ever need the services of a church (like wanting to baptise a kid or something) I'm going to be in trouble. I know German atheists who happily fork over church tax because "it goes to help people". An amazing attitude!

    Despite the higher taxes I miraculously live cheaper here than in the US. I like that taxes are included right in prices for things you buy. I think not doing that can drive up prices in the US because no one is seeing the real price when they look at the price tag!

  18. The thing to remember about the church tax is, as well, that it is tax-deductible. Although not capped, but that does help. Also, school fees are partially deductible, unlike in the US. As are most insurances (including life), most of which are not in the US. Just part of the reason that doing taxes in both countries is so challenging (of course, the hard pasrt is that I can't really read the literature here, and it's not translated).


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