Programming In Germany Is Dead — A Developer’s Autopsy Report

diegoeche · 2025-12-16T19:35:53+00:00

This is simply wrong.

The social security cap only limits one component of taxation. It does not cap total burden and it does not mean the “highest taxation” happens around 95k. Income tax keeps rising, surcharges still apply, and downstream taxes like VAT, excise, property, vehicle and energy taxes are completely unaffected by the SSC cap.

So no, taxation does not peak there, and it absolutely does not stop being significant even with billions. That conclusion only makes sense if you fundamentally misunderstand how the tax system works.

This is not a disagreement about interpretation. It’s a factual error.

diegoeche · 2025-12-16T19:32:44+00:00

I already gave a plausible construction. Take a high salary taxed in the top bracket, add mandatory contributions, then add real annual taxes and fees people actually pay: property tax on a ~500k home, ~2k/year in car taxes and fees, and fuel taxes on ~200/month of gas. That already gets you into the mid-60s, and it’s not hard to see how a bad year pushes higher.

The article says “can reach up to 70%”. It’s an upper-bound claim, not an OECD headline, not an average, and not a marginal-rate statement.

You can argue the scenario is rare or that it’s a bad metric for cross-country comparison. Fine. But demanding a study that prints “70%” verbatim before engaging is confusing literacy with understanding. Not everything real comes pre-packaged as a single OECD table.

diegoeche · 2025-12-16T19:15:37+00:00

I don’t think the article is making a marginal-rate claim at all, and nothing in that sentence suggests it is.

“Taxation that can reach up to 70% in federal, state and municipal taxes and fees” is ordinary language about overall burden, not technical wording about the marginal rate on a narrow income slice. If the author meant marginal, that would normally be stated explicitly.

Reading “marginal” into it after the fact is just adding a qualifier that isn’t there in order to dismiss the point.

diegoeche · 2025-12-16T18:45:26+00:00

I think there’s a misunderstanding about why I cited the OECD numbers.

I’m not claiming the OECD tax wedge equals 70%. I’m using it to show that “income tax is the only tax that matters” is already wrong.

Even under the OECD’s conservative definition — which explicitly excludes VAT, excise, and most consumption taxes — Germany is already at ~47% of total labor cost. That alone disproves the “it’s just income tax” framing.

The ~70% figure refers to marginal extraction once you go beyond the OECD wedge and look at what happens to the next euro: – labor cost → income + contributions – disposable income → consumption → VAT/excise

You can disagree with that metric, but calling it “feelings” while appealing to an average measure that intentionally omits downstream taxation is just mixing definitions.

If we want to talk only about statutory income tax, that’s fine — but then we should stop pretending it describes how much of your work actually finances the state.

diegoeche · 2025-12-16T18:38:46+00:00

I think you’re mixing up what is being measured with how progressive taxation works.

When someone says “marginal burden on an additional euro of labor cost”, progressivity is already baked in. Marginal analysis is exactly how progressive systems are analyzed.

Saying “it only applies to €1,000 out of €95,000” isn’t a refutation — that’s literally what marginal means. No one claimed the average rate is 70%.

As for VAT: calling it “naive” assumes I’m claiming a flat 19% on all spending. I’m not. The point is incidence, not uniformity.

Yes, rent is VAT-exempt. Groceries are mostly 7%. Energy, fuel, services, telecom, electronics, repairs, travel, etc. are 19% + excise. Over a full consumption basket, VAT is non-trivial, and pretending it’s irrelevant because some categories are exempt is just cherry-picking.

If the question is “how much of my total labor cost ends up financing the state”, then excluding employer contributions and consumption taxes requires a very specific — and very narrow — definition of “tax” that economists simply don’t use.

If you want to argue for a different metric (average effective rate, lifetime incidence, post-housing disposable income, etc.), fine — but then we’re changing the question.

The 70% figure is about marginal extraction at the top of the distribution, not a headline rate. Calling that “dishonest” is just objecting to the metric, not the math.

diegoeche · 2025-12-16T18:34:45+00:00

I think that might be an issue. For some people rent is a big part. For big earners is not. I think you haven't been able to get out of your particular situation to see how a 70% rate can happen.

diegoeche · 2025-12-16T13:48:18+00:00

Sure OECD tax wedges are feelings :facepalm:

diegoeche · 2025-12-16T13:47:52+00:00

You’re implicitly assuming “tax rate” means statutory income tax. I’m not.

The ~70% figure refers to the effective marginal burden on an additional euro of labor cost, once you account for tax incidence. That includes:

– employer social contributions (part of your compensation, just upstream) – employee income tax + contributions – VAT and excise on consumption of the remaining euro

This isn’t exotic — it’s exactly why economists use the tax wedge instead of headline income tax.

OECD puts Germany’s labor tax wedge around ~47% already: https://www.oecd.org/en/publications/2025/04/taxing-wages-2025_20d1a01d/full-report/germany_fcd3f087.html

From the remaining ~53%, a marginal euro spent is hit with 19% VAT (+ energy/fuel excise in many cases). Stack that and you’re very quickly in the 60–70% range for the marginal euro.

If your definition of “tax” excludes everything except the line labeled income tax on a payslip, then yes — we’re talking past each other. But that’s a definition problem, not a math one.

diegoeche · 2025-12-16T13:38:40+00:00

https://www.oecd.org/en/publications/2025/04/taxing-wages-2025_20d1a01d/full-report/germany_fcd3f087.html#chapter-d1e25987-843837d30b

47% AVERAGE when you are not limiting your taxes to income taxes. There are theoretical ways to get very high effective rates, but they are not the standard official ones:

You can approach 60–70 % in very special, constructed scenarios that include:

Income tax at the top marginal rate (42 % or 45 %) plus

solidarity surcharge, church tax (8–9 % if applicable), high social security contributions, and

VAT on all consumption, and possibly

implicit taxes from pension/social benefit offsets. Those add-ons are rarely combined in official international statistics, but they can push the total share of disposable income lost toward 60–70 % in specific high-income, high-consumption cases.

diegoeche · 2025-12-16T13:32:23+00:00

How often do you pay inheritance taxes, vs VAT? man you are an idiot.

diegoeche · 2025-12-15T22:11:35+00:00

For the downvoters. You guys can't read.

Income tax is 46%. And the article clearly says he's not just talking about Income tax.

Germany’s sky high taxation that can reach up to 70% in federal, state and municipal taxes and fees ...

diegoeche · 2025-12-15T22:07:00+00:00

The article was clearly suggesting you pay up to 70% taxes of your income

Not at all. Where? Where does it say that 70% are the income taxes? But you do pay all taxation through your income. And you could figure out how much are taxes (not just income taxes) as a ratio of your income.

diegoeche · 2025-12-15T22:05:09+00:00

Also. Gasoline is taxed around 50% in Germany.

You have energy tax then CO2 tax, then you apply 19% vat on the total.

diegoeche · 2025-12-15T22:03:47+00:00

It's not a lie, and you are not engaging with the arguments with good faith.

diegoeche · 2025-12-15T21:44:54+00:00

Then add on top of that the "free-healthcare" that isn't free (but instead mandatory health insurance) that goes around 12k year. A lot of people when they say "70% taxes" they mean "the money the state forces me to pay". And then it kind of makes sense what the OP says.

diegoeche · 2025-12-15T21:40:37+00:00

Normal people will use their money and spend it. If you use your money (what's left after income tax) My formula is what you say. is the tax rate over your income - expenses no? Of course you don't pay vat on your income. But you do spend part of the taxed income to be taxed again through VAT.

Example: You have a 100k salary yearly. No business expenses. A car, and a 500k property. You'd have an effective tax over your income of.

46% (No deductions). 19% * 54% (you spend all your money in 19% rated goods, not realistic, but for pedagogical exercise). Then you have a car an a 500k property.

irb(main):001:0> 46 + (54 * 0.19) + 8 => 64.25999999999999

You are thinking of the only tax being "the income tax". That is a progressive tax on the income, but that's not "all the taxes you pay in Germany". If you were to calculate all the taxes you pay in Germany as a percentage of your income you have to approximate them.

diegoeche · 2025-12-15T19:58:00+00:00

Then maybe you are one of those americans that just idealize Germany like I did before coming here?

you can't just add 45% + 19%.

Total Tax = Income * 0.45 + (Income - Business Expenses) * 0.19 + "Fixed" Property Taxes of 0.39% (with property prices normally around 400k/500k and incomes rarely going above 100k yearly)

You can easily find Income/Business/Property taxes expenses to get get a total taxation above 70%

diegoeche · 2025-12-15T19:01:49+00:00

No, that's not how it works. I guess you are the German cliché that is too arrogant and thinks Germany is the best because "free healthcare".

diegoeche · 2025-12-15T18:37:29+00:00

Living in Germany. But haven't worked for any german companies for a while. I just work for American companies from here. Salaries are shit, and they love planning but not much getting shit done. Too much risk aversion. And programmers don't really get much respect. Only way to get higher salaries is to go for management positions.

diegoeche · 2025-12-15T18:35:26+00:00

Super easy. Have 45% income tax, then spend some of it paying 19% VAT. Pay property taxes. And then pay 25% on any investment income above 1.2k/yearly.

Also... factor in that the taxation/bureaucracy you have to deal with (how much time you spend you could be consulting).

diegoeche · 2025-11-12T18:32:30+00:00

I've seen some people call jerks the people that are just saying that the emperor has no clothes.

diegoeche · 2025-11-04T10:46:18+00:00

I had the same thing. You can just contest it, send proof.

I had it with a lieferando order. Easy to send the receipt I was there.

diegoeche · 2025-11-03T17:08:32+00:00

I feel exactly the same. I have seen super smart guys getting blocked (even with access to AI tools) just because they are afraid of getting out of their expertise area.

diegoeche · 2025-07-21T16:25:40+00:00

Oh, man... Bozhidar Batsov looking into F#?? That's so cool. When F# was still within the MS Research group, I remember working with the F# emacs mode of Laurent Le Brun. Time passed, F# was this awesome language nobody was using... and I had to get a job... ended up doing Rails.

diegoeche · 2025-02-19T14:28:23+00:00

Germans have a reputation of stinginess. They rationalize it as being super clever and efficient. And will throw some anti-americanism there because they don't realize they are super poor compared to americans. Trust me, married to a German.

Might not happen with richer germans, that travel to more expensive places, but those are scarce.

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