Work in Germany: If more than the gross leads to less net


    Who more works, you must have at the end of the month, more money in your pocket. In this equation, they can all easily. The Problem: In practice, the equation is not often. Reason completely the result of the uncoordinated Interplay of social benefits, social insurance contributions and taxes. “In alone with children and a gross income of between 1700 and 2350 Euro to pull the net income decreases with each added Euro earned. More gross thus leads to less netβ€œ, Andreas Peichl, the Munich-based Ifo Institute already several months ago, of all places.

    John Pennekamp

    editor responsible for economic reporting, responsible for “The Lounge”.

    F. A. Z.

    But only Single parents, couples with and without children and Single households are affected. Remedy is actually the current from the families and the Ministry of social Affairs, promoted to a “Strong-families-the law should create”. But it will change in practice, hardly anything, shows a study by two research institutes.

    For those Affected is so far: An increase in salary or extra hours pay off for you if you earn several hundred euros a month more. For the span in-between services such as the housing allowance part way social abruptly, and grab it higher tax rates. Below-the-line incentives to work more are missing – and especially in times where labour is scarce, diminishes the understanding of this abuse.

    More than cosmetic corrections?

    As to the Problem, point about the current arrangements for the child Supplement. This power – not to be confused with the children’s money – will get about 90,000 families in Germany. It is designed to prevent parents or Single parents are alone recipients, therefore, Hartz IV, because they have a child. Of a given own income, parents can receive up to 170 Euro per child and month, in addition to child benefit and housing benefit.

    “However, there are significant incentive problems,” says Florian Buhlmann, researchers at the centre for European economic research in Mannheim (ZEW). An example: Earned a single earner with a Partner and two children up to 2400 Euro gross per month, a moderate wage increase harmful to him. As for this budget, the so-called crash is edge 2400 Euro, which means a higher income for the child Supplement. “In the example budget, the Person must earn at least 400 Euro more, so that the net remains,” says Buhlmann.

    Now, the Federal government has promised to alleviate this Problem. In the “Strong families act”, the families and the Ministry of labour is actually still in this year, the Cabinet wanted to bring, is not only intended to increase the power up to 183 euros per month. As is to be eliminated in addition, the abrupt cliff edge at an income limit and the transfer withdrawal rate to be defused. Additional income has been counted so far, half of the height of the children was awarded, should it be in the future, only 45 percent. Of each additional Euro earned a little more would be left.