False claim: “free stuff” is funded by these high tax rates in “socialist” EU countries 

Multiple accounts on Facebook are circulating an image which makes the claim that high tax rates in European countries are behind “free stuff” advocated for by “socialism”. The image gives a breakdown of income, VAT, and gasoline taxes in Germany, England, Italy and Greece, as examples of countries with what they call socialist policies.

The image makes the claim that in Germany, income and VAT taxes, as well as gasoline (per gallon) with tax are respectively 47.4%, 19%, and $6.04. In England, these same measures are respectively 47%, 20%, and $6.10. In Italy, 45.8%, 22%, and $6.84. And in Greece, 65%, 24%, and $6.83.

GERMANY
According to the European Union, income taxes follow a progressive model in Germany, here The income tax bands are as follows:

Incomes under €9,000: 0% (exempt)

Incomes between €9,000 and €54,949: 14 to 42%

Incomes from €54,950 to €260,532: 42%

The highest incomes (those above €260,533) have an income tax rate of 45%. The part of the claim about Germany’s income tax rate is therefore false. Only incomes over €260,533 come close at 45%.

The standard VAT rate in Germany is 19%, while the reduced VAT rate (applicable on specific goods and services and exempting most electronically supplied services) is 7% (here). The part of the claim about Germany’s VAT tax rate is therefore true.

Bloomberg placed the average price of a gallon of gas in the fourth quarter of 2019 at $5.85, here:Germany:USD:g. Given market fluctuations, it is not unreasonable to consider the part of the claim about gasoline prices in Germany to be true.

ENGLAND
Regarding the claims about England, Reuters was able to check according to the information hosted on the United Kingdom’s government website. On the website www.gov.uk/income-tax-rates, the income tax bands are as follows:

Incomes under £12,500: 0% (exempt)

Incomes between £12,501 and £50,000: 20%

Incomes between £50,001 and £150,000: 40%

Incomes above £150,000: 45%.

The part of the claim about England’s income tax rate is therefore false. Only incomes over £150,000 come close at 45%.

In the country, www.gov.uk/vat-rates the standard VAT rate (for most goods and services) is 20%. The reduced rate (applicable to some goods and services like children’s car seats and home energy) is 5%, while food and children’s clothes have a 0% VAT. The part of the claim about England’s VAT rate is mostly true, with some exceptions.

Bloomberg placed the average price of a gallon of gas in the fourth quarter of 2019 at $6.17, here:United-Kingdom:USD:g. Given market fluctuations, it is not unreasonable to consider the part of the claim about England’s gasoline prices to be true.

ITALY
According to the European Unihere in Italy the progressive income tax bands are as follows:

Incomes up to €15,000: 23%

Incomes between €15,001 and €28,000: 27%

Incomes from €28,001 to €55,000: 38%

Incomes from €55,001 and €75,000: 41%

The highest incomes (those above €75,001) have a capped income tax rate of 43%. The part of the claim about Italy’s income tax rate is therefore false. Only incomes over €75,001 come close at 43%.

In Italy, the standard VAT rate is 22%, while the reduced VAT rate is between 5 and 10% (see here). The part of the claim about Italy’s VAT tax rate is therefore mostly true.

Bloomberg placed the average price of a gallon of gas in the fourth quarter of 2019 at $6.69, here:Italy:USD:g Given market fluctuations, it is not unreasonable to consider the part of the claim about Italy’s gasoline prices to be true.

GREECE
According to the European Unihere in Greece there are different tax rates for different kinds of incomes. The income tax schedule for income from paid employment, entrepreneurial activities, and pensions is as follows:

Incomes up to €20,000: 22%

Incomes between €20,001 and €30,000: 29%

Incomes between €30,001 and €40,000: 37%

Incomes over €40,000 are subject to 45% in taxes. The part of the claim about Greece’s income tax rate is therefore false. The highest bracket, 45% for incomes over €40,000 do not come close to 65% as claimed.

In Greece, the standard VAT rate is 24%, while the reduced VAT rate is between 6 and 13% (see here). The part of the claim about Greece’s VAT tax rate is therefore mostly true.

Bloomberg placed the average price of a gallon of gas in the fourth quarter of 2019 at $6.82 here:Greece:USD:g Given market fluctuations, it is not unreasonable to consider the part of the claim about Greece’s gasoline prices to be true.

“SOCIALISM” CLAIM

It is worth mentioning that while many countries in Europe have smaller socialist or communist parties within their multiparty systems, they are not countries living under “socialism”. European countries all embrace a capitalist economic system balanced with varying degrees of state welfare programs. Generally, only the Nordic/Scandinavian countries (none present in this claim) are considered “Social Democratic” (not “socialist”), and are the most left-leaning on this scale (read more here and here).

VERDICT

Partly false: the VAT and gasoline prices listed are accurate but the income tax figures are not. The percentages are incorrect, certainly not reflective of tax rates on average incomes and are above even the rates applied to the highest incomes in these countries.

Source: Reuters

 

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