... 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%.
Because according to this [1] HSBC advice, these were the tax bands in force from 2013:
2013 National Income Tax Rates Taxable Income Band € National Income Tax Rates
... 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 55,000That 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.
[1] http://www.expat.hsbc.com/1/PA_ES_Content_Mgmt/content/hsbc_...
[2] http://www.keepeek.com/Digital-Asset-Management/oecd/taxatio...