Within a year, more than 288,000 Germans have moved abroad. A recent survey suggests many highly skilled professionals are eyeing a move – and most do not expect to return soon.
I’d argue no, but with an important distinction: the issue is how the term “top earner” gets conflated with “wealthy.”
When talking strictly about income tax, a skilled engineer earning €100k and a CEO earning a high salary face surprisingly similar marginal tax rates. In Germany, the top income tax rate (Spitzensteuersatz) of 42% kicks in at around €70k of taxable income. Once you add mandatory social security contributions, a skilled professional making €80k–€100k is already paying close to 50% of their gross income in taxes and deductions.
Because of this system, skilled workers look like “top earners” on paper, but this creates a massive misdirection in political and media debates.
Whenever there is a call to “tax the rich,” politicians typically respond by debating whether to increase the Spitzensteuersatz or the Reichensteuer (the 45% top rate). But doing that doesn’t actually hit the rich, it hits upper-middle-class professionals like IT specialists, engineers, and doctors. Politicians can then easily deflect the discussion by saying, “We can’t raise these taxes; it would hurt the productive middle of our society.”
The truly wealthy do not build or hold their wealth through monthly wage income. Their wealth comes from assets like corporate stock, real estate, and capital gains. In Germany:
Capital gains are taxed at a flat rate of ~26.4% (far lower than the top income tax rate).
Wealth/asset ownership itself is not taxed (Vermögensteuer is inactive).
Wealth transfers and corporate inheritances often benefit from major tax exemptions.
If someone earns a high salary through labor and already gives up nearly 50% in tax and contributions, I personally would say, they are paying their fair share. Squeezing high-earning workers even more is counterproductive. If we actually want a fair tax system, the political debate needs to stop focusing on income tax and start focusing on taxing capital gains, asset growth, and wealth transfers equally.
Which only the most stupid superrich (or normal people who saved up) really pay.
If you’re superrich all your assets belong to your holding. When you gain money from your holdings (e.g. dividends) they are taxed way below 1%. Your now untaxed capital sits in your holding. Privately you now put that holding as a security for a credit. Bravo, now you are privately in debt and can save some more taxes.
How do you pay off the credit though? Fear not: next year your holding is worth more, because it once again gained untaxed income. You just borrow more money, pay off your old debt and repeat that.
Isn’t it a bit disingenuous, calling highly skilled professionals “top earners”? Wouldn’t the top earners be C-suite level, skilless leeches?
I’d argue no, but with an important distinction: the issue is how the term “top earner” gets conflated with “wealthy.”
When talking strictly about income tax, a skilled engineer earning €100k and a CEO earning a high salary face surprisingly similar marginal tax rates. In Germany, the top income tax rate (Spitzensteuersatz) of 42% kicks in at around €70k of taxable income. Once you add mandatory social security contributions, a skilled professional making €80k–€100k is already paying close to 50% of their gross income in taxes and deductions.
Because of this system, skilled workers look like “top earners” on paper, but this creates a massive misdirection in political and media debates.
Whenever there is a call to “tax the rich,” politicians typically respond by debating whether to increase the Spitzensteuersatz or the Reichensteuer (the 45% top rate). But doing that doesn’t actually hit the rich, it hits upper-middle-class professionals like IT specialists, engineers, and doctors. Politicians can then easily deflect the discussion by saying, “We can’t raise these taxes; it would hurt the productive middle of our society.”
The truly wealthy do not build or hold their wealth through monthly wage income. Their wealth comes from assets like corporate stock, real estate, and capital gains. In Germany:
If someone earns a high salary through labor and already gives up nearly 50% in tax and contributions, I personally would say, they are paying their fair share. Squeezing high-earning workers even more is counterproductive. If we actually want a fair tax system, the political debate needs to stop focusing on income tax and start focusing on taxing capital gains, asset growth, and wealth transfers equally.
Rant over.
Which only the most stupid superrich (or normal people who saved up) really pay.
If you’re superrich all your assets belong to your holding. When you gain money from your holdings (e.g. dividends) they are taxed way below 1%. Your now untaxed capital sits in your holding. Privately you now put that holding as a security for a credit. Bravo, now you are privately in debt and can save some more taxes.
How do you pay off the credit though? Fear not: next year your holding is worth more, because it once again gained untaxed income. You just borrow more money, pay off your old debt and repeat that.