Social imbalances due to high taxes and taxes on minimum wages

The problem of high social security contributions and taxes, especially VAT, on income in the minimum wage sector, reveals a profound systemic underfunding of the actual subsistence level in Germany. While politicians tirelessly emphasize that work protects against poverty and that the social network is intended to ensure a decent life for all citizens, reality shows forLow earners a completely opposite picture. Despite hard work, people who work in the minimum wage sector or earn little over it often find themselves in situations of massive financial uncertainty. Instead of social security, they experience a double burden: they have to co-finance a community that they hardly benefit from themselves, and at the same time remain far awayunder the constitutionally guaranteed subsistence level. This problem is particularly acute with the cornerstones of the standard of living: rent, heating costs and electricity.

Minimum wage in practice: Between aspiration and reality

On paper, the minimum wage is intended as the lowest limit for living work. But in practice there is often little left of it. Even in the case of full-time employment, after deduction of taxes, social security contributions and unavoidable VAT and excise, net income is no longer sufficient in many regions of Germany to meet the basic needs ofcover. While the wage tax in the lowest income area is reduced by basic allowances, the social security contributions – pension, health, nursing care and unemployment insurance – are particularly sensitive. They further reduce the already tight net income. The episode: Despite contributions, the social security remains incomplete and is neither in thecase of illness still in old age for a life with dignity.

VAT: Covert burden on low earners

VAT is particularly serious as a hidden additional burden. It meets daily consumer goods and services, regardless of how efficient the individual is. People with minimum wage income spend a significant proportion of their living expenses, all of which are subject to VAT. up to a fifth of that anywayminor Net income flows directly back to the state – especially with costs such as food, energy, electricity and rent. Although there are reduced tax rates for some products, the largest issue items in the poverty budget – such as energy and services – are usually subject to full rates. This shows a blatant regressiveness that reflects the principle of socialjustice leads to absurdity.

Price shocks and lack of adjustment: tightening of shortfalls

The already existing underfunding of the subsistence level is further intensified by the multiple price shocks of recent years. Heating costs, for example, have increased rapidly due to the energy crisis, inflation and international tensions. While higher earners can cope with these cost increases more easily and often benefit from tax relief, inflation isMinimum wage households particularly hard – especially if they live in poorly insulated apartments with inefficient heating systems. Social benefits such as housing benefit, heating costs subsidies or basic security rates are often only adjusted with a considerable delay or insufficiently. The flat rates on which the subsistence level is based only insufficiently reflect the reality of the cost burden.The rest must be financed from the remaining income.

Rent load and housing shortage: subsistence level under scrutiny

The overload of housing costs is particularly clear in many large cities and metropolitan areas. The minimum wage is often no longer sufficient to pay for an apartment that is considered “reasonable”. Capping limits for social benefits are forcing many people to live in overcrowded, outdated or outskirts of the city. Drastic savings in other areas of lifebecome a necessity. The high rent burden leads to over-indebtedness, rent arrears and unsafe living conditions. The rent explosion, the lack of affordable housing and restrictive social legislation are driving numerous minimum wage recipients into permanent short-term existence.

Electricity costs and social participation: the underestimated supply gap

The gap in electricity costs is no less serious. The blanket coverage by the basic security is often too low to absorb regular price increases. Power blocks are no longer an exception for low-income households. The VAT on energy makes every electricity bill more expensive. Additional payments or increased deductions can be made from the scarcebudget can no longer be served. The result is compromising on heating, electricity and often also in terms of nutrition. The actual cost of living is far above the statistically recorded values with which the subsistence level is calculated.

Social security contributions and the promise of the solidarity principle

The social security system often appears to be a holey network for low earners. Even those who earn just above the minimum wage pay full contributions to health, pension and long-term care insurance. In theory, the principle of solidarity is behind it – in practice, however, income is not enough to ensure sustainable security. many people in precariousEmployment relationships cannot build up a living that secures a living. The personal contribution to medical services, medication and remedies often remains a de facto hurdle for them. Social security becomes a patchwork quilt that has many gaps.

Indirect taxes and lack of savings opportunities: double the burden

A particularly serious problem is that the majority of the expenses of low earners are attributable to immediate needs. While higher incomes can save, invest or shift expenses, low earners are not a choice. With every issue, be it for purchasing, electricity, heating or local transport, you finance the state budget without you from itsufficient benefits. The system of taxes and duties not only prevents social mobility, it also institutionalizes the permanent undercut of a living standard that secures a living. In this way, social advancement is made almost impossible.

Symptom relief and the basic structural problem

The political discussion about relief measures such as one-off payments, housing benefit reforms or energy price brakes only reveals the symptoms, but not the causes. The structural burden of indirect taxes and social security contributions in the lower income range remains untouched. Actual living expenses are constantly increasing, while standard rates and minimum wages with significantdelay and adjusted too low. This is particularly visible in the case of energy and housing costs. Political aid is often solutions that do not solve the basic problem – the insufficient calculation of the subsistence level.

The work trap: permanent undercut of social participation

This system is used to trap people with minimum wages: They are forced to accept poorly paid jobs to secure the minimum subsistence level, without any prospect of social or material advancement. The more you work, the greater the tax burden, while the costs continue to rise. The phenomenon of “working poor” has long since become normal. thePermanent under-coverage in living, heating, electricity and everyday life means not only financial hardship, but also social exclusion: leisure, mobility, health and social participation become luxury goods.

Political rhetoric and statistical tricks: The concealment of poverty

Politically, it is claimed that the welfare state guarantees the subsistence level. In truth, this assurance is based on statistical manipulation and ignorance of the real spending structure. The methodical reduction of the subsistence level obscures the actual social impoverishment. More and more people are dependent on blackboards, energy debts and private over-indebtedness. theMinimum wage shows, for example, how social inequality is technically managed but not resolved.

Structural poverty despite work

The result is a growing number of people who live in relative or even absolute poverty despite full-time employment. The tax and duty system reduces their wages to such an extent that it is not enough for a worthy life – especially in the costs that should actually secure a decent existence: living, heating, electricity and basic supply. The permanent”Small calculation” of the minimum subsistence level through German social law and the redistribution mechanisms of the tax and social system is an expression of a profound social imbalance. The consequences are dramatic: Poverty despite work is becoming an everyday life for more and more people. A fundamental reform is urgently needed to restore social justice and real participation.