Those who earn less than 3151 euros gross per month are really free of progressive taxation, “that is the bottleneck”, says economist Dénes Kucsera of the liberal business think tank Agenda Austria. Even those who earn more will do much better in the future than before, but there’s no full compensation for the cold progression, Kucsera says.
In short, they welcome the comprehensive abolition of cold progression, fulfilling an old demand of Agenda Austria, Kucsera told the APA. Until now, each percentage point of inflation has meant an additional burden for taxpayers of EUR 300 million. “The government currently assumes 5.2 percent inflation in the period July 2021 to July 2022, which will be more or less compensated. That means about 1.8 billion euros. But if you took the cold progression for the whole year, so from January to January 2022, you could also reach three billion relatively easily.
Lower incomes more relieved
Agenda Austria, however, is disturbed by the fact that lower incomes are relieved more of the cold progression than higher incomes. “It would have been even better to relieve every taxpayer right away,” says Kucsera. However, the differences are not really big: while the cold course is overcompensated with 21 euros per year for a gross monthly income of 1500 euros and 40 euros for 2500 euros, there is no full compensation for the cold course for incomes above 3151 euros. 20 euros per year. With a gross income of EUR 6,500, EUR 93 is still missing for full compensation, has calculated Agenda Austria.
“Incentive to work part-time only”
That sends the wrong signal, says Kucsera, because overtime carries more weight and there could be an incentive to only work part-time. Full-time employees would have earned an average of 3818 euros in 2020 and wages should fall more in this income category.
In short, the effect of cold progression is often misrepresented and misunderstood, Kucsera said. For example, it is incorrect that after a salary increase one can have a lower net salary than before. In special cases, however, it is conceivable that salary increases exceed the limits of social benefits. But these limits would also be largely adjusted, as would the income limit for small jobs, which will be 485.85 euros per month in 2022.
Source: Krone
I’m an experienced news author and editor based in New York City. I specialize in covering healthcare news stories for Today Times Live, helping to keep readers informed on the latest developments related to the industry. I have a deep understanding of medical topics, including emerging treatments and drugs, the changing laws that regulate healthcare providers, and other matters that affect public health.
