How the United States Tax Rates Compares to Germany - Barnard Vogler & Company (2024)

Having recently visited Germany and being a CPA, I naturally was interested in their taxes. I have heard throughout my life how taxes in Europe are extremely higher than in the United States and I thought I’d do a simple comparison.

According to a KPMG report on income tax and social security rates on $100,000 USD of income, in Germany the percentage paid by individuals was 28.3% plus 9.8% in pension insurance for a total of 38.1% (this does not include the mandatory 15.5% for health insurance that we in the United States pay separately). In the Unites States the percentage paid was 18.2% plus 7.65% for social security for a total of 25.85% (if you live in California, add another 7% for 32.85% total). So, for somebody earning $100,000 the taxes in the United States are lower regardless of where you live.

The above result is what I figured since the United States has low marginal rates for low earners. For somebody well-off making over $1,000,000, I hypothesized that the United States would buck the stereotype and have higher rates. In Germany the top tax rate is 50.5% (which starts at $283,326 USD for a single person ). In the United States the top rate is 43.4% (starting at $406,750 USD for a single person) and would be as high as 56.7% if the income was earned in California. Further, in Germany dividends and sales of capital assets are taxed at 25% while in the United States there is a maximum of 23.8% (or up to 37.1% if you live in California).

So there you have it, if you are wealthy and live in California you are paying more income tax than people who live in the European Unions’ largest economy. Of course this is only one facet of the tax system. There are many others, like the value added tax of 19% in Germany, but Germany’s corporate tax rate is 15% while ours in 35%. If you live in California and are paying these high rates you can’t even take solace in the fact that you’re working less. In Germany the average work week is 35 hours with 24 paid vacation days and 10 paid holidays!