With the income tax every person who earns in Germany money is a part of his earnings to the Federal, the Länder and the municipalities. It is thus one of in addition to Corporation tax and to taxes turnover tax the so-called Community. This, in turn, the main source of revenue of the Federal form.

Without you would work in Germany, only a little. In the year 2017, the income rinsed alone expensive, around 255 billion euros in the state coffers. Today, it has existed for 100 years. Here is their story.

Fresh money for the Republic

Already before the Weimar Republic, there existed different approaches to the taxation of private individuals. At that time they were used, such as, for example, in East Prussia of the early 19th century. Century, primarily the financing of Wars. But it was not until the financial reform of 1920, drawn up by the Reich Finance Minister Matthias Erzberger, a control system whose comprehensive laws made a centralisation of financial administration, as well as a uniform tax collection possible.

on the whole with the reforms of around 1,000 financial offices in the 26 countries of the Weimar Republic. To acquisitions at the beginning of 12,000 officials for the new tasks, until the end of the reforms were finally 30,000 people in this sector.

So many officers need, but also tasks – and there were now enough. Because of the reforms 16 financial and tax laws came into force. While the citizens would have to pay to Imperial times, between 0.6 per cent (for annual income of 900 to 1050 Mark) and a maximum of 4 per cent (for annual income above 100,000 marks) income tax, were also taxes on luxury items, sales, and inheritances collected. The top tax rate on income was already at 60 percent.

After the war is before the war,

The financial Germany’s demand after the First world war was enormous. The Erzberg itself claimed that it had risen to over “900% compared to the last pre-war years”. However, the fact is that he came up with his reforms soon, more than 80 percent of the income of the Republic, that is to say, the citizens. So he was, of course, not just friends. 26. August 1921 he was murdered by right-wing terrorist bombers. However, even after Hitler’s rise to power, his reforms were further developed. In 1934, for example, the wage tax introduced classes I – IV.

Only after the end of the Second world war, the development of the income continues to be expensive. The allies have not contributed to the development and implementation of the Marshall plan only relevant to the reconstruction of Germany. With the allied control Council, law October 1945 and February 1946, the tax hike in rates in the amount. Up to 95 percent of their income had to pay top earners now.

What the money is to be used, however, was determined only with the basic laws of 1949. Accordingly, first, the respective countries should benefit from the revenue. Later, with the constitutional amendment act of 1955, has been added to the income tax to the community tax and have benefited from the Federal government.

the end of the stark tax rates

The time of the excessive tax rates of more than 60 percent was over now. Instead, it came at the latest with the income tax reform law of 5. August 1974, almost a year to make adjustments in the Rates of income tax. Until the introduction of the Euro in 2002, the input control rate was an average of around 22 percent. The basic allowance increased in this period of 1,680 DM (1958-1964) to 14.093 DM (2001) the year of income. The maximum tax rate was, however, only about 52 percent on average.

With the new currency, the taxation fell. It was thought in the early years, largely on the last (2001) defined entry-level tax rate of 19.9 per-cent, as well as on the maximum tax rate of 48.5 percent. So the German citizens would be in existence no later than the year in 2004, significantly more money from your income. From now on, the Minimum was 16 percent, while top earners had to a maximum of 45 percent of their income to pay.

Today is the free amount is an annual salary of 9.408 Euro. Who earns more, has to pay 14 percent in income tax. As a top earner, you apply only for an annual salary of 57.051 Euro. Then, 42 percent of which are supplied to the state. And who deserves more than 270.500 euros in the year, you must pay 45 per cent, the highest rate of tax in Germany.

This article was written by DOUGH editorial

*The contribution of “100 years of income tax – a short history” is published by LOOT. Contact with the executives here.