Maneuver, cutting the tax wedge: the paradox of the 35 thousand euro quota: if it is exceeded, 1,100 are lost


By John

Confirmation of cutting the tax wedge “guarantees important support for low and medium incomes, in particular the income of workers, increasing the redistributive capacity of the overall contribution and tax levy. However, the band method causes any benefit to cease beyond the gross salary threshold of 35,000 euros gross, with a loss of approximately 1,100 euros if this threshold is exceeded by just one euro.“.

The president of the Parliamentary Budget Office said this Lilia Cavallari in the hearing on the maneuver at the joint Budget Committees of the House and Senate. “In the event of further extensions there would be a strong disincentive to work and it would make it more complex to reach contractual renewal agreements”, he pointed out. The cut in the wedge, which is “the most significant measure of the manoeuvre, equal to 10, 7 billion”, “is financed temporarily in deficit: a possible further extension will require the identification of structural coverage measures”, said Cavallari. “The revision of the personal income tax reduces the rates from 4 to 3 and intervenes on deductions, with a amount equal to approximately 4.3 billion. The benefit is 75 euros per year for income from employment between 8,000 and 15,000; starting from 15,000 up to 28,000 the benefit increases progressively with the income up to a maximum of 260 euros; over the 50,000 euro benefit can be eliminated due to the cut in deductions for non-healthcare charges and expenses”, he added.