Tiered tariff
The term stages collective referred tax law a progressively extending tax rate , wherein one of the parameters marginal rate , control amount or average rate does not increase linearly, but runs in stages. According to the three parameters, there are also three versions of a tiered tariff.
Tier limit rate tariff
In the tiered limit rate tariff, the marginal tax rate is increased according to income levels. From the specified income limit, every euro earned is subject to a higher marginal tax rate. The part of the income that lies within the previous level will continue to be taxed at the lower marginal tax rate applicable there. The respective rate is therefore only valid for the corresponding share of the income.
The tax amount (euro) corresponds to the area below the stepped line for the marginal tax rate, which is determined by the limits of the basic tax allowance and individual income. In the graphic above, you can see that the tax amount for the two variants shown for the tiered tariff (blue and magenta) increases linearly within the tariff zones. However, the straight line becomes steeper from step to step.
The percentage of income tax to be paid depending on income does not increase in stages, even with a tiered tariff. This is shown in the graph below as the average tax rate. However, this curve has a certain "waviness" at the transition points between the steps.
- Example variant 1
This example corresponds to the blue curve in the graphs.
0 % für Einkommensanteile bis 10.000 € (Grundfreibetrag) 10 % für Einkommensanteile zwischen 10.001 € und 50.000 € 25 % für Einkommensanteile zwischen 50.001 und 90.000 € 40 % für Einkommensanteil über 90.000 €
An employee who earns € 24,000 (as taxable income) would pay nothing for the first € 10,000 (basic allowance), and pay 10% in taxes for the rest (€ 14,000).
14.000 * 10 % = 1.400 (Steuer zu zahlen)
1.400(Steuern) / 24.000(Einkommen) * 100 % = 5,8 % Durchschnittsteuersatz
The average tax rate of 5.8% is lower than the marginal tax rate of the first level because the basic tax allowance reduces the taxable income. However, this is not a special feature of the tiered tariff, it is the same with the linear progressive tariff.
- Example variant 2
This example corresponds to the magenta colored curve in the graphs.
0 % für Einkommensanteile bis 10.000 € (Grundfreibetrag) 18 % für Einkommensanteile zwischen 10.001 € und 40.000 € 36 % für Einkommensanteile zwischen 40.001 und 80.000 € 54 % für Einkommensanteil über 80.000 €
An employee who earns € 48,000 (as taxable income) would not pay anything for the first € 10,000 (basic allowance). For the portion up to € 40,000 (€ 30,000) he would have to pay 18% in taxes, and for the remainder (€ 8,000) he would pay 36% in taxes.
30.000 * 18 % = 5.400
8.000 * 36 % = 2.880
insgesamt sind das 8.280 (Steuer zu zahlen)
8.280(Steuern) / 48.000(Einkommen) * 100 % = 17,3 % Durchschnittsteuersatz
If the tier limit rate tariff only consists of a single tier with a constant tax rate on income in excess of 10,000 euros, it is a proportional tariff ( flat tax ) with a basic tax allowance . On the other hand, if you increase the number of levels and at the same time reduce their height, the course approaches a linear-progressive tariff .
Tier tariff
In the tiered tariff, income tax is calculated separately by tier. In contrast to the tiered limit rate tariff, the tax is not calculated as a percentage, but a fixed tax amount is due depending on the fixed income levels.
- example
Income ≤ € 10,000 tax = € 0 (basic tax allowance)
10,000 <income ≤ € 20,000 tax = € 1,000
income> € 20,000 tax = € 5,000
With the tiered tariff, the average tax rate is degressive , i.e. it falls with increasing income. The figure shows the constant tax amounts within the individual levels as a blue line. The red curve for the average tax rate results accordingly. The marginal tax rate is zero within the levels because the tax amount is constant.
If the tiered tariff only consists of a single tier, it is the so-called poll tax or flat-rate tax , in which all taxpayers or contributors pay the same amount of money regardless of income.
A tiered tariff can also result from a rounding rule. The relevant income is first rounded to full amounts before the tax is calculated. This means that the amount to be paid remains constant within a certain income range. In Germany, for example, there were rounding rules up to and including 2003, with which the taxable income had to be rounded down to a full 36 euros or a full 54 DM. This could lead to the effect of the sequence reversal. Therefore, these rounding rules were abolished in 2004 and replaced by simple rounding to full euros. As a result, the amount levels are very small, which is why the effect has practically no effect. The corresponding width of the levels is now only between 2 and 5 euros annual income (see graphic).
Step average tariff
In the tier average tariff or tier average rate tariff , the (income) tax is calculated separately according to tier . In contrast to the tiered tariff, the tax is calculated as a percentage, with the total income always serving as the basis for the calculation. Here, too, the problem of the order reversal can arise.
The marginal tax rate and the average tax rate are the same within a level.
- example
Income <€ 10,000 tax rate = 0%
income <€ 20,000 tax rate = 10%
income> € 20,000 tax rate = 30%
This tariff is used, for example, in the German inheritance tax under the designation full volume tariff. To avoid the problem of reversing the order, there is a hardship rule there.
Order reversal
Order reversal means that someone earns more gross but less net than a comparable person. This effect would occur both with the tier amount tariff and with the tier average tariff : The net amount in the area of the upper edge of one level is greater than in the area of the lower edge of the next level with a larger gross amount. Due to the "jump", a much higher tax amount is deducted from an only slightly higher gross amount. At the jump points the marginal tax rate converges towards infinity.
- Example of the tiered tariff
A gross income of € 19,000 is charged with a flat tax amount of € 1,000 according to the above tiered tariff. So the net income is € 18,000.
Now the gross income increases to € 21,000. According to the tiered tariff, a tax of € 5,000 is now due. The net income decreases to € 16,000, although the gross amount has increased.
Such taxation is obviously not negotiable. Taxpayers will of course try to avoid income increases that bring them just above the next threshold.
- Example of the tier average tariff
A gross income of € 19,000 is charged with an average tax rate of 10% according to the tier average tariff. So the net income is € 17,100.
Now the gross income increases to € 21,000. According to the tier average tariff, a tax of 30% is now due. The net income decreases to € 14,700, although the gross amount has increased.
Such a tariff is obviously not negotiable either. The German inheritance tax therefore uses a modified tiered average tariff in which the sequence reversal is softened with a hardship rule.
application
A tiered tariff is used in the following countries:
- Austria
- Australia
- Great Britain
- Netherlands
- United States
- New Zealand
The current German income tax tariff has also had a tiered component in the form of tariff zone 5 (proportional zone 2) since 2007. The German inheritance tax works with a modified tiered tariff, whereby the respective tax rate is applied to the entire amount of the asset.
See also
Individual evidence
- ↑ See Tax Policy Rainald Borck LMU Munich SS 2008, slides 22 and 23 (PDF; 253 kB)
- ↑ Cf. Finanzwissenschaft 1, Walter Ried, Ernst-Moritz-Arndt-Universität Greifswald, slide 72 ( memento of the original from December 8, 2015 in the Internet Archive ) Info: The archive link was inserted automatically and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ See Finanzwissenschaft I, Walter Ried, Ernst-Moritz-Arndt-Universität Greifswald, SS 2009, Fig. 24, slide 16 ( memento of the original from January 28, 2015 in the Internet Archive ) Info: The archive link was inserted automatically and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 395 kB)
- ↑ Lars P. Feld, Heidelberg University, control technology and tariff theory (slides 39 and 56) (PDF; 254 kB)
