How the Germans Tax Families

German like French families can share their tax liabilities.  The rules are slightly different but the result is much the same. Married couples can choose to be taxed jointly and split their income. Income tax is calculated on each share separately and the tax paid is double that amount.

As a result no married couple pays higher income taxes than a single individual with the same level of household income. It also means that a couple with two children earning Euro 52,000 pays no income tax. A UK single earner married with two children paid £5756 in 2021 earning an equivalent amount (£42,600).

There are both tax credits and tax allowances for children. If the value of the credits is less than the value of the tax allowances the family gets the tax allowance instead of the credits. In 2020 the value of the tax credits to a single earner German family earning Euro 52,000 was slightly higher than the value of the tax allowances.

An owner occupier UK family on £42,600 pays £5756 income tax and would still have a net liability of almost £4000 if child benefits were taken into account. The family would not be getting universal credit.

Paying rent of £161 per week equal to the allowance for a three bedroom house in Leeds they would be entitled to universal credit of £83.79 per week which if this was also taken into account would have given the a net liability of about £420 not very much different from the German family. Unlike the German family they then face a 70% marginal rate whereas the German family has at Euro 52,000 a zero income tax marginal rate - 42% if social security contributions are included.