Also if you somehow manage to increase your income, over half of it disappears in taxes and social security contributions.
In Germany (where I reside), the first €9744 (2021) is untaxed, then 14% until a certain amount (can't find it atm) and max 43%. However, if you do your tax returns your effective tax rate will drop significantly. I'd wager that most pay around 25% in total income taxes, excluding things like the health insurance and other taxes.
However, we indeed do not worry about saving up money to put our kids through school.
Earning 65k which what most companies in the tech scene now offer to lure them in as a SWE in Germany is a great salary realistically, considering for example an architect with a masters degree will earn around 55k and no real improvement in sight.
Also don't forget to factor in that the concept of being fired for PROPER reason is nearly impossible in most European countries. Even if an employer hits hard times they cannot just lay off an entire department to quickly green out the numbers in the books, there needs to be proper grounds. I currently need to give my employer 3 months notice before I can even leave, same goes for them to me.
Of course, this isn’t true for Americans in general. I want us to adopt European social policies; however, for SWEs, the financials are just better in the US.
... until you get a really expensive chronic disease. And then it fails miserably.
I know upper middle class parents whose kids got a disease which need ~$5000/month meds for a few years (and nontrivial infusion center costs on top).
It worked ok for some, many had been informed that the insurance company decided not to pay - requiring lawsuits (some settled, some ongoing).
No European, Canadian or Israeli parent that I know of kid with the same disease ever had to fight or pay out of pocket - it was all covered by the single payer with no hassles.
And since it’s a “savings account” I can invest the tax-free savings into the stock market with index funds. I’ve actually had a decent amount of growth in that account just from stock market gains.
In Germany you can have private health insurance (if you make more then 63k a year you can opt-out of public health insurance) and there the out of pocket is usually around €350. In the Netherlands the out of pocket is also something like €300, which most already consider too high.
The option to get it to zero is of course possible but usually doesn't offset the savings.
However the notion of having to need savings to be sick is... to me extremely foreign and strange.
See, that's the point. In Europe it works well for everyone, no matter how much you earn. It's a mentality-thing in the end (where the US position is hard to grasp for Europeans).
White collar workers, especially STEM ones have largely coasted through this pandemic.
You still need to save for a pension in almost every European economy, one isn't given to you (state pensions in Europe, even in the UK, are contribution-based). Welfare systems in Europe are not redistributive like in the US, they are typically contributory (you get out what you put in). So there is no sense in which your fundamental needs will be met irregardless of anything else.
I think the issue with the US is that you have a very redistributive political economy, and so many people believe that those elements are the same everywhere AND they could have all the free healthcare...it doesn't really work that way (marginal tax rates on middle-class incomes are above 50% in some European economies, and top rates are usually lower than in the US...try doing that in the US).
Uh, no? Pensions are contribution based but that contribution comes from taxes on your salary. Far from me to say that the system is perfect but you basically just need to work.
Welfare is absolutely not contributory in Europe, it wouldn't make sense as those who need public welfare the most are those that can contribute less. Some countries like Austria have a healthcare system based on insurance, but employers are required to pay for it, students have it for free and unemployed as well.
This is just incorrect.
In Ireland, there is a contributory state pension [0] of up to €500 a week, which you are entitled to if you spent enough years in the workforce making tax contributions. There's also a means-tested non-contributory pension [1] of €237 per week which you are entitled to if you don't have other savings or income, such as the contributory pension. In addition to these, private pensions exist: basically savings vehicles with certain restrictions and certain tax advantages.
There's a similar two-tier system for unemployment assistance and certain healthcare entitlements. I understand many other European countries have similar arrangements, despite your assertion.
[0] https://www.citizensinformation.ie/en/social_welfare/social_...
[1] https://www.citizensinformation.ie/en/social_welfare/social_...
That is exactly what I said or are we not understanding each other? Your pension comes from the taxes on your salary.
The existence of private pensions doesn't deny my point. I thought it would be irrelevant to mention them as they exist everywhere.
In some countries, e.g. NL/DE, unemployment however is contribution based and you always pay for it (it's tacked on next to your normal taxed), which when needed is limited to 2 years based on 60% of your last net income. The idea is that you should still be able to afford your current way of living without too many compromises when you got laid off and haven't found a new job yet.
In Germany for example welfare isn't great, it's around €400/mo though the state pays your rent directly.
But I don’t need to save for their education or anything like that. I don’t save explicitly in their name.