Control wedge
The term control wedge is used differently.
Effective tax burden through consumption taxes
By levying consumption taxes (including VAT in this sense ), the supply and demand functions are shifted . The welfare loss differs from the nominal tax burden. The effect can be shown graphically by shifting the supply and demand curve as a wedge ( Harberger triangle ).
Difference between net earnings and gross personnel expenses
The tax wedge is also the difference between the employer's expenses for a specific employee (labor costs) and the net earnings of this employee. The name is misleading insofar as the difference is not only the tax ( wage tax , solidarity surcharge , possibly church tax ), but also the contributions to statutory social insurance ( pension insurance , unemployment insurance , health insurance , long-term care insurance , accident insurance)) includes. The tax wedge is given as a percentage of labor costs.
Individual evidence
- ^ Christian Keuschnigg, Public Finances: Revenue Policy, Mohr Siebeck p. 20
- ↑ https://www.faz.net/aktuell/wirtschaft/iwf-attackiert-steuerkeil-in-deutschland-15589772.html