Why

The Ability to pay is being taxed

anything which goes above and beyond the absolute necessities of living is taxed

Types of Rates

flat/linear → equal tax rate with all income levels
- Tax(Income) … linear
- has a somewhat degressive effect (below)
  - in this sense similar to VAT
progressive → increasing tax rate with increasing income levels
- Tax(Income) … exponential
- redistribution effect
- mostly standard, question is: How steep is the curve?
degressive → decreasing tax rate with increasing income levels
- Tax(Income) … logarithmic
tax free region → e.g. below certain income no additional tax is collected

less than 10% of earners contribute most of the income tax
30-40% are in special tax free region (Austria below 11.000)
interesting coupling with Inflation
- cold progression → Inflation inflates the income levels
- if tax laws stay the same, then same income level after inflation is lower adjusted for inflation since larger
  - Billions of Income Tax increase
tax brackets
- various regions wherein a flat rate exists
- Marginal Tax → how is the next euro taxed
family tax
- individual tax → no matter what family structure, individual is taxed
  - promotes part-time work
- marriage split → when married the income is split among both parties
  - e.g. in Austria and Germany
- family/household tax → complete family/household is added up and taxed appropriately - family/household tax → complete family/household is added up and taxed appropriately
  - promoted high fertility
  - individual income added up and divided by head count (even children)
  - e.g. in France → a lot of French people don’t pay income tax

tick markes taxed or not

[!] monthly salary
- part of wage is withheld → Income Tax Withholding
[!] one-off consulting fee
- employees: little economic risk → “absence of economic risk”
- employees: lack of independence
- tax for 13th and 14th wage in a year in Austria → only 6% tax flat rate
[!] bank interest
- taxable just about everywhere
- withholding of Capital Gains Tax → similar to Income Tax
[!] selling stocks → basically Capital Gains Tax
[!] rental payments
- related to Inheritance Tax
- related to Definition
lottery win
- tax already withheld with lottery