Today we returned to the Alexanderplatz area for a free afternoon pipe organ concert at Marienkirche. Doing that reminded me of all the free concerts we’ve attended both here – and in Canada – and led to thinking about how the arts are supported in each country. THAT led me down the rabbit hole of how tax money in general is prioritized. Is it on defence? Health? Infrastructure? Education? Culture?
Some of the things we have enjoyed most (besides the food, of course) in Germany and Austria are these wonderful organ concerts in churches; the (generally) reasonable ticket prices for theatres, art galleries, and museums; the fabulous statuary in parks and other public spaces; and the stunning architecture of the historic buildings and churches.
The arts are substantially supplemented in Germany and Austria through tax dollars; in Germany 2% of taxes go to maintaining the arts (in 2021 the equivalent of $85 USD per person). No one complains. We regularly see posters that read “Access to the arts is a right, not a privilege”.
As is the case in many/most Christian countries, church attendance here is WAY down, but there is general acknowledgement that church buildings themselves are an important repository of history and art. As such, all residents of Germany who belong to a tax-entitled religious congregation are required to pay a church tax, which is an 8-9% surcharge on their income tax, whether or not they ever actually set foot in church. There is an easy process for opting out, and yet people who don’t attend church generally still pay the tax, which is used to keep the buildings maintained as historic sites. It’s a matter of national pride and interest in history.
Living here this month, I’ve become quite interested in how taxes compare to what we pay in Canada. What follows are lengthy notes, comparisons and a few links to statistics websites. If you’re interested, please read on, but be forewarned: it’s pretty dry stuff. However, it’s the kind of data that I find fascinating and want to be able to look back on.
If you persevere through it, there’s a food picture at the end!
Canadian Income tax rates for 2021:
Basically, everyone files as “single”, and there are allowable deductions that apply to supporting other family members. The brackets apply to net (after deductions) income.
In Canada, income falls into one of four income tax “brackets”. The tax bracket is based on taxable income—that is, total income minus allowable deductions and exemptions. As is the case with German taxes, the rate is progressive; each bracket pays a different rate of tax. For example, if your taxable income was $50,000 in 2021, you would:
• Pay 15% on the amount up to $49,020, or $7,353.00
• Pay 20.5% on the amount between $49,020 to $98,040, or $200.90
So, the total federal tax payable in Canada on a $50K net income: $7,553.90, or 15.1%. Then I went to the German government’s official website to find out how we compared.
As with Canadian taxes, the German tax rate is progressive, with the first €9700 tax free, and subsequent income taxed in brackets.
In Germany, on top of income tax, a “solidarity surcharge” (Solidaritätszuschlag or Soli) at a rate of 5.5% of the income tax is added for people with higher incomes. This surcharge was introduced in 1991 to help cover the additional costs of the German reunification, including the debts and pension obligations of the East German government, as well as the costs of upgrading infrastructure, and environmental remediation in the new states of Germany. After 30 years of financing reunification, in 2022 this surcharge will be significantly scaled back.
Tax comparison for a 50K net income: CANADA $7554. GERMANY $10,022. USA $6748.
The real difference of course (and the one that counts) is in how tax money is spent, as a proportion of the entire pot that each country collects, AND in relative cost of living. I’ll use the data from Cost of living in a global comparison . That site adjusts the average cost of living inside the USA (based on 2021) to an index of 100. All other countries are related to this index. Therefore with an index of e.g. 80, the usual expenses in another country are 20% less than inside the United States. Canada’s index is 105.6, or 5.6% higher than our nearest neighbour. Germany’s is 92.3, or 7.7% less than the USA, despite having higher income tax!
You have to ask yourself why, especially since fuel prices in Germany are so much higher than in the US. Some of it certainly has to do with health care and education costs, and how they are paid (centrally vs by individuals). Germans definitely pay higher taxes than North Americans, and yet taxes – and complaints about them – are just not a topic of daily conversation (nor is money in general). Food, arts and entertainment, travel, and interesting work anecdotes are what seem to be on people’s minds when they get together (over food and, often, card games). They certainly don’t compare salaries at social events – it is considered rude to ask someone how much money they make.
It certainly seems as if – in general – Germans get good value for their tax dollar. Significant to every parent, In 2014, Germany’s 16 states abolished tuition fees for undergraduate students at all public German universities. Germany’s wonderful technical and trade schools are also tuition-free.
Germany has the world’s oldest national social health insurance system, dating back to 1883. Everyone, regardless of their income, has healthcare coverage and access to affordable medical care. The public health insurance system in Germany is funded by national contributions, which are automatically deducted from salaries every month, whether someone visits a doctor or not. So, while people are mostly exempt from paying for medical treatment if the need arises, they obviously still pay for healthcare through their monthly contributions.
The national health insurance covers most of the cost for doctor’s visits, medical and dental treatment, surgery, and prescription medication, with the following (in 2022) deductible (“co-pay”) amounts:
• Up to €10 per quarter for a doctor visit (an annual maximum of €40)
• The first €10 of most prescription medication.
• Approximately €10 per day for hospital stays, for a maximum of 28 days per year, or €280 (after that, no daily cost)
• The full price for prescription vision aids, such as glasses or contacts.
No one seems to complain about health care. I have relatives here who have significant medical issues; they’re all being treated – well – and without incurring financial hardship.
The same website has a fascinating chart that rates “quality of life”, on which you can choose your priorities (and the chart will recalculate based on those) Quality of life in country comparison. The best achievable value in each division is 100. Using only the default values, no country rates higher than 75 overall, even though in an individual category (eg health care, safety, political stability, or cost of living) someone like Luxembourg might score a 100, as they did for safety. Canada and Germany both came in at an overall rating of 69; the USA at a very close 67.
Anyway, researching all of those stats was a result of me thinking about arts funding. If you stayed the course, you might be wondering what kind of sustenance fuels my single-finger typing. Today we ate lunch outside beside the Spree, opposite the Museum Island, at a restaurant serving typical Berlin specialties.
Tomorrow’s plans are still up in the air, but it’s getting hot again in Berlin, so we may try to find an indoor activity. There are certainly lots of museums from which to choose.