There was still no high inflation, but evidently first the post-Lehman Brothers financial crisis, then the sovereign debt crisis were enough to pulverize whole decimals of income. Yes, because reading the latest statistics from Istat on employment, it turns out that the net salary available to Italian workers discounted a 10% drop between 2007 and 2020, with the measures for Covid that at least allowed to stop the collapse in the pandemic year. Everything, or almost everything, due to a fiscal wedge, that is, the incidence of taxes and contributions on the cost of work, did fall, but still higher than 45%.
In short, Italians’ paychecks are anything but fat. And to think that there would be a great need for this, considering the acquired inflation for 2022 equal to 8.1%. Going back to the figures released by Via Cesare Balbo, in the same period 2007-2020, employers’ social contributions decreased by 4%, also due to the introduction of tax relief measures, while workers’ contributions remained substantially unchanged and taxes on dependent work increased by an average of 2%. No, that’s all. In 2020, the year of the outbreak of the great pandemic, around 76% of gross individual income (net of social security contributions) did not exceed 30,000 euros per year: half of gross individual income is between 10,000 and 30,000 euros per year , more than a quarter is less than 10,000 euros and only 3.7% exceeds 70,000 euros. There are too many taxes on work, it will be said. And that’s just the way things are, even if you want to read the Statistics Institute’s data against the light, you can catch a few glimpses.
For 2020, for example, Istat estimates that the reduction of the tax burden (Irpef bonus and complementary treatment) has affected 12.7 million people, for a total expenditure of 10.8 billion euros in transfers, equivalent to 850 euros per capita. The tax benefit mainly benefited wage earners belonging to the middle-upper quintile of equivalent family income: 17.3% benefited the bottom quintile (the richest), 26.4% benefited the 4th quintile (that is, the group just below the most rich), 24.1% in the third quintile (central organ of distribution), 20.3% in the second and 11.9% in the first quintile (that is, the poorest man).
Thankfully, the executive led by Mario Draghi had already cut the tax burden by 2% for income of up to 35 thousand euros, consequently leading to increases at the end of the month. Giorgia Meloni then made a new cut, identifying two gross income thresholds, 20,000 euros and 35,000 euros, on which to apply an additional 1% cut. And now, thanks to a change to the maneuver, the maximum limit of 20,000 euros has changed and rises to 25,000 euros.
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
