Working mothers and single parents “only rarely” made the transition from €400-per-month “mini-jobs” to better paid work, the study by the Bertelsmann Foundation think tank found. In no other country is such a shift so unattractive from a tax perspective, the organisation said.
A "mini-job" allows workers to earn up to €400 a month almost tax-free. But in general these are an occupational dead-end, the Bertelsmann Foundation found.
The study calculated the earnings and taxes for a typical four-person household in Germany. If the primary earner has an average income and the secondary earner makes 33 percent of that (a rate above the mini-job level), then for every extra euro earned by the secondary earner, just 50 cents ends up in the family's purse. The other half goes to the taxman.
Even in traditionally high-taxing countries such as Demnark or Sweden, these so-called marginal tax burdens are clearly lower, at 42 percent and 30 percent respectively, the study said. Considerably better were the rates in other European countries for secondary earners: 23 percent in France, 18 percent in the Netherlands and 15 percent in Austria.
In some cases when a secondary earner edges above the €400-per-month mark, income tax must be paid on the entire earnings, the study said. For example, if the gross income adds up to €500, it is hit by a tax rate of 25 percent – assuming there is no income-splitting used – meaning the worker pays €125 income tax.
The net income therefore works out to be less than a €400 job, meaning the person has gone backward.