the big problem in Italy are taxes, I pay 38%, but for more than 55k you pay 41%, how politicians pretend Italy can survive? In Switzerland you pay 16%.
38% is the marginal rate; that is, if you earn less than 55k you aren't paying 38%, you pay 38% on income between 28k and 55k. If you do the math, you are paying somewhere between 25% and 31%, probably less because of various returns that you get ("detrazioni").
In fact the actual % is around 35% on 75k euro income, and it doesn't reach 41% until around 200k euro (where the marginal rate is 43%).
In the US, if you earned $50k you'd have a federal income tax around 15%, plus a state income tax (around 5% for California), plus possibly a municipal income tax (around 3% for New York City for example). We're already at 23% and you're getting much worse healthcare than in Italy (even assuming your employer is paying for it, which is not a given) and hardly any retirement plan.
If you're employed the problem is that Italian wages are low (especially in IT), not that taxes are high. Really, taxes in Italy are only high for self-employed people.
What you're saying is basically true, but to make a fair comparison you need to consider that in Italy as well you need to add municipal and regional tax (which together are probably around 1%) and particularly that you do pay for you mandatory retirement plan - not with your taxes, but with an additional mandatory withholding that goes from 25% to 35%; plus your employer has a 5% tax on its "profits", but said profits don't consider expenses for your wage, so it's effectively a 5% tax on your wage (this is of course in addition to the regular 26% tax on company profits, from which you can discount employee wages as expenses).
My impression is that the whole system is willingly structured in an overly complicated way, with taxes split between several payers and several taxable bases, so that you cannot know how much of your income are paying.
Also, the taxation is really similar between employees and self-employed workers; it's just that the latter have a marginally better grasp on how much they're paying.
In the US, you also forgot federal social security tax, (7.65% * 2), Medicare tax (~3%)... And hey, looks like your tax bill just hit 35%. Oh, and feel free to drop another ~$3-10,000 on healthcare.
... and they do not mean you pay 38% if you're below 55,000. With the tax bands above, you'd pay ~32% if you earn 55,000
That does in fact place Italy quite high, but OECD ranks Italy below Belgium, Austria, Germany and Hungary in overall tax wedge amongst OECD countries [2] (note that if the numbers look surprising, it is because the OECD is ranking based on total tax wedge including employers social security payments, which often seems weird if you're used to comparing based on the contracted salary - these tax rates are not the percentage paid on the salary in your employment contract, but by the sum of your salary and the employers contributions). Looking only at the actual income tax, it'd rank much lower - it's not a particularly high income tax level relative to the average income.
Switzerland is low in proportion in large part because its overall income levels are very high, and it's income from other sources is very high.
The bigger problem in Italy seems to me to be that you have on of the least progressive income systems I've seen, so low earners gets hit particularly hard.
> The bigger problem in Italy seems to me to be that you have on of the least progressive income systems I've seen, so low earners gets hit particularly hard.
There are other mechanisms to make things more progressive. These include special regimes for low income self-employed people and extra returns keyed on stuff such as children (which progressively reduce and finally disappear as your income grows). You end up not paying taxes at all unless you earn at least ~8,000 euros. On a 30k euro income (about average for a secretary with 10 years experience) the overall final rate is around 23-24%.
I really doubt you only pay 16 % of taxes in Switzerland. When talking about taxes, especially comparing between countries, you need to be very careful about what you are talking about.
FWIW, income taxes are 40 % for income above ~32k, and the UK are not considered heavily taxed in Europe.
That's actually 40% marginal tax on income over £43,000, not £32,000, if you earn under £100,000. It's only 40% from £32,000 if you earn over £122,000.
true, but that already starts to depend on your personal details, which is why comparing countries is hard. For example, while many countries take into account your marital situation when calculating brackets, the UK almost doesn't: it is much better, from a tax perspective, for a household to have 2x 40k earners than 1x 80k earner.
And then of course, you need to compare the services you get for the money the state take from you (e.g. in the UK, state pension is close to nothing so you need to remove 15-20 % of your pre-tax income, and then you need to consider mediocre health system, expensive child care, etc...).
Swiss taxes vary hugely between cantons (equivalent of a state in the US) and you pay even less than 16% depending where you live. An example based on the official Swiss Federal Tax Administration online calculator [0]. Single no children living in canton Zug Switzerland (one of the Swiss tax havens):
Gross income CHF 120'000 minus deductions you end up with 100K taxable income and the total tax burden (federal, cantonal and communal) is about 11K.
Edit: the same example for a canton with higher taxes (Bern) gives a total tax burden of 22K
Switzerland's median income is between 2.5 and 3 times that of Italy. They have a smaller black market economy than Italy, so they're likely deriving a higher actual share of taxation out of it.
Further, the 16% referenced isn't complete. If you cap out the federal income tax in Switzerland, it's more likely you're paying a total of closer to 25-30% in income taxes (depending on what part of the country you're in), between federal, cantonal and municipal income taxes.
Also there are lots of hidden costs. Health insurance and mandatory unemployment insurance etc. A lot of stuff is pushed onto the private sector but made mandatory, so you have to buy it.
This is because it's only an average not a real fact. Some people pay more, some people pay less. When you can't have more than 25K in a year, you don't pay income. If you have million you don't pay because you are smarter and can escape the tax... or at least fix it with a flat tax of 15%. Medium class pay the most but this is hidden, hidden in all the small tax.
More realistically it is because average income in Switzerland is about 2.5 times as high as in Italy. A 16% tax rate across the board in Switzerland is comparable to an across the board 40% tax rate in Italy, which is relatively in line with the actual tax rates in Italy, especially when considering that an overall poorer population may also result in substantially higher welfare costs.
