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WEALTH

Germany’s rich get richer despite crisis

The financial crisis can't touch them - Germany's richest just keep getting richer. Top earners' salaries are up, but the bottom 40 percent of full-time employees are earning less after wages were adjusted for inflation.

Germany's rich get richer despite crisis
Photo: DPA

A government report on poverty seen by Tuesday’s Süddeutsche Zeitung newspaper said the development “violated the people’s sense of justice.”

The richest ten percent of German households have more than half of the total assets, the report said – taken to include real estate, investments, land or claims from company pensions. And the poorest fifty percent of households have just barely one percent of the net wealth.

The net wealth of German households has doubled in the past two decades, from €4.6 billion to more than €10 billion.

Süddeutsche Zeitung said the report also showed that there was still a wealth gap between people in former eastern Germany and western Germany. West German households had an average net wealth of €132,000, east German households just €55,000.

Private citizens may be getting richer, but the report showed the state was getting poorer. The Labour Department report claimed that net assets of the German state fell by more than €800 billion between early 1992 and early 2012.

It also noted that as part of the rescue efforts during the financial crisis there was “an observable shift of private assets and liabilities in state budgets.”

The report defended the increase in non-traditional employment, including part-time work, and temporary or contract positions, saying these jobs were not created at the expense of normal working conditions.

But the Ministry of Labour did note that: “hourly wages which are insufficient to secure the livelihood of a single person who is working full-time, exacerbates the risk of poverty and weaken social cohesion.”

The Local/sh

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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