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	Comments on: Italian Puzzles:  will the announced tax cut be real?	</title>
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		By: Alberto Lusiani		</title>
		<link>https://en.irefeurope.org/publications/online-articles/article/italian-puzzles-will-the-announced-tax-cut-be-real/#comment-28799</link>

		<dc:creator><![CDATA[Alberto Lusiani]]></dc:creator>
		<pubDate>Fri, 10 Dec 2021 18:56:27 +0000</pubDate>
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					<description><![CDATA[&lt;strong&gt;Italian Puzzles:  will the announced tax cut be real?&lt;/strong&gt;&lt;br /&gt;You judge the proposed income tax reform on the basis of the difference of the fiscal + benefits wedge as a function of income, but in my opinion that information is misleading and inappropriate for the scope, because of the giant flaws of the current fiscal wedge that the reform only partially attenuates, in the correct direction.

The study provided to the Italian Parliament (https://www.senato.it/application/xmanager/projects/leg17/attachments/documento/files/000/028/516/Focus_Ame_DEF_26.7_rev.pdf) shows that in Italy as of 2021 the marginal taxation is 90% around 20 KEur of annual income, 61% in the range 28-40 KEur, and _lower_ from 40 Keuro onward (order 54% until 100 KEur, then below 50%).  In other words, Italy&#039;s marginal taxation vs. income is mostly regressive and contrary to the Constitution.

In order to attenuate the excess of taxation on medium-low incomes, the marginal taxation rate as been reduced.  Incomes around 50 KEur get the maximum gain in absolute terms, because they were most hit by the integral of the marginal taxation over the whole range.  Low-medium income get a much smaller gain in absolute terms because they integrates a smaller range of high marginal taxation, and were favoured by earlier changes like the Renzi bonus that did lower their taxes at the expense of increasing the marginal taxation on middle incomes (but not on high incomes).  Any sensible reform should have modified the marginal taxation rate in a way that should not have hit low-medium incomes much more than high incomes.

To judge the current reform, you should compare marginal taxation vs. income before and after with the marginal taxation for a country with a decent overall tax+benefit system, such as UK, Germany or Sweden. If you do so you will see that the post-reform taxation is not equivalent but at least more close to any decent taxation system in any reasonable country.]]></description>
			<content:encoded><![CDATA[<p><strong>Italian Puzzles:  will the announced tax cut be real?</strong><br />You judge the proposed income tax reform on the basis of the difference of the fiscal + benefits wedge as a function of income, but in my opinion that information is misleading and inappropriate for the scope, because of the giant flaws of the current fiscal wedge that the reform only partially attenuates, in the correct direction.</p>
<p>The study provided to the Italian Parliament (<a href="https://www.senato.it/application/xmanager/projects/leg17/attachments/documento/files/000/028/516/Focus_Ame_DEF_26.7_rev.pdf" rel="nofollow ugc">https://www.senato.it/application/xmanager/projects/leg17/attachments/documento/files/000/028/516/Focus_Ame_DEF_26.7_rev.pdf</a>) shows that in Italy as of 2021 the marginal taxation is 90% around 20 KEur of annual income, 61% in the range 28-40 KEur, and _lower_ from 40 Keuro onward (order 54% until 100 KEur, then below 50%).  In other words, Italy&#8217;s marginal taxation vs. income is mostly regressive and contrary to the Constitution.</p>
<p>In order to attenuate the excess of taxation on medium-low incomes, the marginal taxation rate as been reduced.  Incomes around 50 KEur get the maximum gain in absolute terms, because they were most hit by the integral of the marginal taxation over the whole range.  Low-medium income get a much smaller gain in absolute terms because they integrates a smaller range of high marginal taxation, and were favoured by earlier changes like the Renzi bonus that did lower their taxes at the expense of increasing the marginal taxation on middle incomes (but not on high incomes).  Any sensible reform should have modified the marginal taxation rate in a way that should not have hit low-medium incomes much more than high incomes.</p>
<p>To judge the current reform, you should compare marginal taxation vs. income before and after with the marginal taxation for a country with a decent overall tax+benefit system, such as UK, Germany or Sweden. If you do so you will see that the post-reform taxation is not equivalent but at least more close to any decent taxation system in any reasonable country.</p>
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