German politicians are fond of saying, “Work must be worth it.” But ever more people who work full-time need state benefits. And the new minimum wage hike is seen as disappointing.

  • velanox@feddit.org
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    10 hours ago

    Lifting the minimum wage directly impacts the available income of the lowest income classes, who in turn spend most of their income on consumption, increasing domestic demand and thus also helping the economy.

    …except when it doesn’t, because the ever-increasing contributions to the Rentenversicherung and Krankenversicherung just eat up all of the brutto increases, leaving people with effectively the same netto. Same applies for every wage increase for every other income class.

    Your points are valid, however please note I never advocated for just reducing the income tax alone, but rather the Abgabenlast that all workers have to carry. Primarily health insurance and pension insurance. These systems have become unsustainable (though I would argue they never really were, the issues were masked by a different age pyramid back in the day) and will have to be completely overhauled, the question is: will someone take the plunge and do this before everything collapses?

    • geissi@feddit.org
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      6 hours ago

      because the ever-increasing contributions to the Rentenversicherung and Krankenversicherung just eat up all of the brutto increases, leaving people with effectively the same netto.

      I’m sorry, you might not mean that literally but too many people perpetuate the myth the taxes and or social security contributions eat up all wage increases or that people get even less due to higher taxes.
      That is complete nonsense. The total tax and social security contribution would have to be at 100% for that to be true.

      If you want people to be able to afford more with their money, then I’d advocate for lower VAT and/or dropping the VAT for basic foods and products to 0%. That wold also help the poor more, serve as a better social redistribution measure and could contribute to more domestic demand.

      If we are not talking about taxes but social security then I agree that there need to be significant reforms.