[Italy] Tax rates disproportionately benefit elite 7%

A new study has highlighted the fact that Italy’s “regressive” tax system - with its inconsistent tax rates - has exacerbated inequalities between the country’s rich and poor, AOL reports.

Over the years Italy has made few changes to its taxation policy over the years which has meant a lower return on investment for lower- to middle-income Italians than their high-income counterparts, the new study - published in the World Inequality Database - revealed.

The study, based on European Central Bank data on wealth distribution, discovered that returns on wealth for the bottom 90 per cent are just 2.5 per cent compared with double that for the wealthiest 10 per cent.

“This implies higher income concentration at the top of the income distribution and reveals that Italy’s tax system is more regressive than previously estimated, with tax rates disproportionately benefiting the top 7%,” it said.

The country’s most affluent have reportedly enjoyed significant leeway in retaining and transferring their wealth.

According to Reuters - citing Treasury data - around 21 per cent of Italy’s taxpayers earn between €29,000 and €75,000 a year, contributing more than 40 per cent of income tax revenues

One way Italy’s wealthiest citizens take advantage of the tax system is through wealth transfer from generation to generation. Inheritance tax in the nation is remarkably low compared with that of other major European economies. Inheritance tax collection amounts to €1 billion annually for the Italian government. The figure totals €9 billion in the UK and €18 billion in France.

Italy is considered a high-tax country, with a tax-to-GDP ratio of nearly 43 per cent; well above the OECD average of 34 per cent. However, the issue is the distribution of taxes, which distorts how much some Italians make compared with others.

The study’s findings have reportedly provoked debate in Italy, at a time when policies around wealth and inequality are at the forefront. Past research has shown the growing gap between rich and poor, particularly exposing Italians ages 18 to 35, who lose most of their income to paying taxes and Italy is currently Europe’s second-most indebted economy, 

The study was authored by five economists. They propose levying a wealth tax (different from income tax) on the top 7 per cent who are disproportionately benefiting from the current regime. This would open the door for a progressive policy that taxes people according to what they make; the lowest earners paying the least tax and vice versa.

Source: AOL 

(Links via original reporting)

A new study has highlighted the fact that Italy’s “regressive” tax system - with its inconsistent tax rates - has exacerbated inequalities between the country’s rich and poor, AOL reports.

Over the years Italy has made few changes to its taxation policy over the years which has meant a lower return on investment for lower- to middle-income Italians than their high-income counterparts, the new study - published in the World Inequality Database - revealed.

The study, based on European Central Bank data on wealth distribution, discovered that returns on wealth for the bottom 90 per cent are just 2.5 per cent compared with double that for the wealthiest 10 per cent.

“This implies higher income concentration at the top of the income distribution and reveals that Italy’s tax system is more regressive than previously estimated, with tax rates disproportionately benefiting the top 7%,” it said.

The country’s most affluent have reportedly enjoyed significant leeway in retaining and transferring their wealth.

According to Reuters - citing Treasury data - around 21 per cent of Italy’s taxpayers earn between €29,000 and €75,000 a year, contributing more than 40 per cent of income tax revenues

One way Italy’s wealthiest citizens take advantage of the tax system is through wealth transfer from generation to generation. Inheritance tax in the nation is remarkably low compared with that of other major European economies. Inheritance tax collection amounts to €1 billion annually for the Italian government. The figure totals €9 billion in the UK and €18 billion in France.

Italy is considered a high-tax country, with a tax-to-GDP ratio of nearly 43 per cent; well above the OECD average of 34 per cent. However, the issue is the distribution of taxes, which distorts how much some Italians make compared with others.

The study’s findings have reportedly provoked debate in Italy, at a time when policies around wealth and inequality are at the forefront. Past research has shown the growing gap between rich and poor, particularly exposing Italians ages 18 to 35, who lose most of their income to paying taxes and Italy is currently Europe’s second-most indebted economy, 

The study was authored by five economists. They propose levying a wealth tax (different from income tax) on the top 7 per cent who are disproportionately benefiting from the current regime. This would open the door for a progressive policy that taxes people according to what they make; the lowest earners paying the least tax and vice versa.

Source: AOL 

(Links via original reporting)