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'Mini-jobs' work against families, study finds

The Local · 26 Nov 2010, 14:20

Published: 26 Nov 2010 14:20 GMT+01:00

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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.

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The net income therefore works out to be less than a €400 job, meaning the person has gone backward.

The Local/dw

The Local (news@thelocal.de)

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Your comments about this article

12:09 November 27, 2010 by adipk
strange system. thats y i always mentioned that there is deficiency of system. Some get benefits and some are living on edge.
12:15 November 27, 2010 by cobalisk
Another reason to scrap the 400€ jobs. While touted as some kind of 'student work' the reality is that most 400 € jobs are held by adults, often immigrants and low education level Germans. As the article states the tax system essentially pins people to these jobs because unless they land a significantly better position, the tax implications take most of the money they would get from more modest raises.

Basically, the 400€ jobs are serving as a default minimum wage which is absurd in a country like Germany because a 400€ a month minimum wage is far lower than anyone can reasonably live on.

I like many things about Germany and for the most part the working conditions are good and the system rewards earners and owners, however, the 400€ is a big black mark on an otherwise equitable labor market.
13:24 November 27, 2010 by gotEnglish?
Thanks for bringing this to light... I am also caught in this tax trap - the husband earns the bulk and I am punished if I earn more than 400 Euro or the 2100 Euro cap on "Honorär" type work (i.e Volkshochschule). We will be meeting soon with our accountant to see if my becoming a "Freiberufler" with lots of tax write-offs will allow me to earn more.... but then I'll be punished by not being allowed to be "Familienversichert" any longer... there just sure isn't a lot of incentive to earn more!
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