> Why do people earn only 5k after tax ?
It's not clear what your point of reference is. If you're wondering why it's much lower than in the US (where the 90-percentile household is probably around 170k USD pre-tax or 9k-10k post-tax), there are many many factors that contribute to the difference. The most important ones (unordered) are IMO:
- USD is probably overvalued by 15%-20% [1].
In the past 10 years, the EUR/USD rate fluctuated between 1.05 and 1.55, currently it's 1.12. It's unlikely that the relative living standards between the US and Germany fluctuated as much as 50% in this period, so a lot of the nominal incomes differences are not real.
- Americans work 30% more hours than Germans [2]
These two factors can explain most of the pre-tax income differences.
The net difference is a bit higher still, due to higher taxes/mandatory payments. I don't have references at hand, but at the €100k level, take-home pay is around 60%-62% of gross, while for an American at $112k it's closer to 70% (federal, state and payroll). No comment about justness, proper accounting for transfers, subsidies, other taxes, mandatory insurances, etc. This is a huge sprawling debate topic, but it's indisputable that disposable income at the same gross is higher in the US than in Europe. IMO, the first 2 factors accounting for differences in gross incomes are more important anyway.
A fairly mainstream economic theory is that the higher European (marginal) taxes are actually a major cause of the lower working hours (and hence lower personal income) [3]. The highest marginal rates actually don't differ that much (typically around 50% in Europe, 45% federal+state in the US), but in Europe the higher rates typically kick in at much lower levels: US marginal rate at $100k is probably around 30%, whereas in many European countries it's already in the 40%+ bracket.
[1] https://www.bloomberg.com/news/articles/2019-06-11/trump-has...
[2] https://en.wikipedia.org/wiki/List_of_average_annual_labor_h...
[3] https://www.wsj.com/articles/SB109830788286551061