• Wed. Oct 27th, 2021

Eurispes: “-1.320 euro taxes with 3 rates and maxi-central bracket”

Byeditorial

May 13, 2021

A tax reform with the reduction of the tax rates to three, but with a maxi central bracket would result in a “not dramatic” loss of revenue for the Treasury but “significant effects” of tax relief for taxpayers with, for example, a saving of 1,320 euros l year for incomes of 40 thousand euros. This is what emerges from the latest Eurispes report. The hypothesis of a single rate between 15 thousand and 75 thousand euros at 27%, while over 75 thousand euros one would continue to pay 43% and under 15 thousand one would continue to pay 23% therefore a system with only three rates, but with a maxiscaglione in the central part “according to the simulations carried out to test the cost of this hypothesis, the loss of revenue for the state coffers would not be dramatic”, writes Eurispes. In the first year, the cost would be 9 billion euros and then, when fully operational, it would increase to 12 billion euros. The effects for taxpayers would, moreover, be very significant. Again according to the simulations, every thousand euros of income over 28 thousand euros would save about 110 euros. Over 55 thousand euros, for every additional thousand euros declared, the savings would rise to 140 euros. So, for example, with an income of 40 thousand euros, the savings would be 1,320 euros a year. At € 50,000 savings would rise to € 2,430 per year, and € 3,500 in lower taxes would be reached at € 60,000. Another hypothesis foresees, for example, that the two power plants of 38% (between 28 thousand and 55 thousand euros) and 41% (between 55 thousand and 75 thousand euros gross) could unite in a single 36% area. This merger would involve 8.2 million taxpayers with a cost of approximately 5 billion. Among the hypotheses in the field there could also be that of a merger of the first two rates, those of 23% for income up to € 15,000 and 27% for income up to € 28,000, in a single rate – equal to example at 20% – which would apply to all taxpayers with incomes up to € 28,000. But the intermediate hypotheses can still be the most varied. As for the German model of progressivity with a continuous rate, it is explained, it involves constantly increasing marginal rates from 14% to 42%, with a further rate of 45%. The most evident advantage of a system similar to the German one would consist in the fact that there would no longer be the great distance of treatment between taxpayers who fall for a few euros in one income bracket or the next, as in the current system. A comparison with the Italian ‘brackets’ progressiveness shows that the German maximum marginal rate exceeds the Italian one (45% compared to 43%), but the tax base to which the German rate is applicable is almost quadruple compared to the Italian one. (270,501 euros against the 75,000 euros of our last bracket). It should also be borne in mind that our socio-economic structure is very different from that of Germany. In Italy there are over 5 million self-employed, while in Germany the vast majority of taxpayers are employees of medium and large companies. The personalized German tax rate would therefore recover progressively only for those who pay income tax in brackets, but not for those who are subject to the many replacement regimes currently in force in our system.