Proposed budget upgrade: accommodation of highest tax bracket at 90% rate
The Lowdown on the Momentum Institute's Proposed Tax Overhaul
Here's a and approachable rundown of the Momentum Institute's five-point plan for a more fair budget consolidation in Austria. The government, aiming to consolidate 6.4 billion euros this year, is set to impact every major demographic, as per SPÖ Finance Minister Markus Marterbauer.
However, the Momentum Institute has proposed innovative strategies to lessen the blow and ensure a more equitable distribution of the financial burden.
- Modernizing the Property TaxThis measure aims to bring in an additional 2.7 billion euros by modernizing the property tax system.
- Inheritance and Wealth TaxA contentious proposal, an inheritance and wealth tax (absent in the government program and similarly ruled out by the finance minister) could theoretically generate six billion euros.
- Corporate Tax HikeIncreasing corporate tax could potentially reap another six billion euros.
- Asking 'Crisis Winners' to ContributeTop earners are expected to chip in around one billion euros.
But it's the fifth proposal that really catches the eye - the "solidarity contribution of top earners." The current top tax rate, with the government extension reaching 55%, applies to income surpassing one million euros.
The Momentum Institute suggests a more progressive structure:
- A 50% marginal tax rate for income ranging from 103,072 to 120,000 euros.
- A 75% rate for income between 120,000 and 500,000 euros.
- A whopping 90% for income surpassing 500,000 euros!
This proposed change would allegedly bring in a further 2.7 billion euros, with only nine percent of the wealthiest fifth (approximately 130,000 individuals) experiencing the impact.
Arguments in favor of such a proposal often revolve around redistribution, social justice, addressing fiscal needs, promoting the solidarity principle, and enhancing progressivity in the tax system. Conversely, critics convey concerns about potential economic disincentives, capital flight, tax avoidance, administrative complexity, and fairness debates. The Momentum Institute's specific arguments for this proposal within the Austrian context remain unclear without further information or statements from the Institute.
The Momentum Institute's tax overhaul proposals extend beyond the property tax and corporate tax hike, delving into other areas of finance. One such strategy is the implementation of a more progressive income tax structure targeting high earners, designed to generate additional revenue for the Austrian government. Critics voice concerns about potential economic disincentives, capital flight, and fairness debates related to this proposal.
