Regressive tariff history

Example poll tax : typically regressive tariff progression

In the case of a regressive tariff , the percentage tax or contribution burden decreases with increasing income. In tax theory, the course of the average tax rate is used as the eponymous criterion. Taxpayers and contributors with a higher income have to pay a lower percentage of their income. In common parlance and partly in case law (Switzerland), the term degressive tariff is often used for it.

This rate profile usually occurs in combination with an initially proportional rate that changes from a certain limit (maximum tax limit , income threshold ) to a regressive rate. If this maximum tax limit is exceeded, the average tax or contribution rate decreases with each additional amount of money earned. For example, with a maximum amount of 50,000 euros, a contributor with exactly this income would pay contributions of 7,500 euros. This would correspond to a contribution rate of 15%. A contributor with an income of 75,000 euros would also have to pay 7,500 euros, which would, however, only correspond to 10% of his income. A regressive tariff course also results from a poll tax , as the picture above right shows.

definition

In taxation, a distinction is often made between regressive, proportional and progressive tariff courses. Decisive for this is the slope of the average tax rate as a function of the base .

With and applies to the slope (first derivative) ${\ displaystyle {\ bar {s}} = {\ text {Average tax rate}}}$ ${\ displaystyle B = {\ text {assessment basis}}}$

{\ displaystyle {\ frac {d {\ bar {s}}} {dB}} = {\ begin {cases} <0 & \ rightarrow {\ text {regressive, falling average tax rate}} \\ = 0 & \ rightarrow {\ text {proportional, constant average tax rate}} \\> 0 & \ rightarrow {\ text {progressive, increasing average tax rate}} \\\ end {cases}}}

Germany and Austria

Regressive tariff progression (falling contribution rates) in social insurance Germany 2011

In Germany and Austria there is no regressive income tax rate . However, contribution assessment ceilings lead to a regressive effect for various social insurance contributions and thus favor those who receive higher incomes. The income-independent health insurance contribution (so-called flat rate per capita or health premium ) discussed in Germany would significantly intensify this regressive course.

Switzerland

In Switzerland , degressive (regressive) taxation came into the public eye in 2006 when first the canton of Schaffhausen and then the canton of Obwalden passed a tax law that provided for degressive taxation. The Federal Supreme Court ruled that this taxation violated the Federal Constitution because it violated the general principle of equal rights. This requires that people with more income and assets have to pay more taxes both in absolute terms and proportionally (BGE 133 I 206 of June 1, 2007).

UK and USA

National insurance ("payroll tax") in Great Britain (red curve)

The payroll tax is often mentioned as a regressive tax in Great Britain and the USA . Although this is not officially a tax, as the payroll tax was created as a social contribution (national insurance) . However, since this tax is withheld together with income tax on the one hand and, on the other hand, goes far beyond financing social benefits in terms of the volume and type of use, it is generally regarded as a tax. Since the payroll tax is levied at a fixed rate on income and only employees pay this tax, it is an example of a regressive tax. The red curve in the picture on the right initially shows the progressive course, which changes from the kink to this regressive course.

Individual evidence

↑ ^a ^b cf. Lecture Fundamentals of Taxation, Silke Übelmesser, LMU Munich, SS 2010, slide 22 , accessed on July 30, 2015
↑ cf. Meaning according to Duden : "decreasing, gradually or continuously decreasing"
↑ ^a ^b BGE 133 I 206 , judgment of the 2nd public law department of June 1, 2007, accessed on July 31, 2015

[LMU_SilkeUebelmesser-1] . Lecture Fundamentals of Taxation, Silke Übelmesser, LMU Munich, SS 2010, slide 22 , accessed on July 30, 2015

[2] . Meaning according to Duden : "decreasing, gradually or continuously decreasing"

[CH_BG-3] BGE 133 I 206 , judgment of the 2nd public law department of June 1, 2007, accessed on July 31, 2015