patrick.net

Thanks to the VAT and ‘insurance contributions,’ the lower and middle classes pay and pay.

The Germans specialize in devising pithy nicknames for tax problems. The “middle-class belly” describes the way in which Berlin’s income-tax code applies steep marginal rates at lower incomes before leveling off—it looks like a protruding stomach on a graph. And now comes the “whale in the bathtub.” It’s the most serious problem of all, and an illustrative one for the rest of Europe.

Europeans believe their tax codes are highly progressive, giving lower earners a break while levying significant proportions of the income of higher earners and corporations to fund generous social benefits. But that progressivity holds true only for direct taxes on personal and corporate income.

https://www.wsj.com/articles/europe-has-a-whale-of-a-tax-problem-1501793392