Tax wedge, here’s where we’re at with the labor tax cut

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“The Italian tax burden on employment – the EU Commission wrote in its recommendations to Italy – is high”. With discontinuous marginal personal income tax rates: while the “employment tax wedge remains high”. The Organization for Economic Co-operation and Development relaunched: “The tax burden on labor has eased somewhat in Italy, but the tax – including taxes on income and contributions – remains among the highest in the industrialized world, especially in the case of workers with children.” For some time, Confindustria has been demanding a lower tax wedge (the difference between the employer’s cost and the employee’s net salary), and in theory, all parties agree. The real issue is finding the necessary resources.

Confindustria suggestion

“The cost of labor is very high – Confindustria President Carlo Bonomi has been repeating it for some time -. At least 16 billion euros are needed, and therefore 1,223 euros are put in the pockets of those with an income of less than 35,000 euros. Not “for once”, but for the whole life of the work: it is an extra month ».

Dragon, pressure 0.4%

Prime Minister Mario Draghi, speaking at the CISL conference on Thursday, confirmed that in 2022 “The tax burden will decrease by 0.4%“. «The government – said the prime minister – has moved quickly to protect workers in the face of the numerous crises in recent years. We have introduced the individual allowance for children», «With the reform of the IRPEF, we have subsidized the income of families, especially the weakest ones. These higher transfers are worth nearly €14 billion when they are fully operational and make our tax system more rational and progressive. We expect the tax burden to be reduced this year by 0.4 percentage points from last year – the largest reduction in the past six years.”

The position of Minister of Labor

For his part, Labor Secretary Andrea Orlando endorsed, but threw the ball in the field of the Economy Minister responsible for finding the resources to intervene.” In the preface to the tax wedge cut I have expressed my assessment for some time now, I will consider a multi-year plan with a commitment of resources to combat reasonable tax evasion – Orlando explained – but I am not the Minister of Economy and Finance.” Cutting the business tax wedge, according to the minister, requires “a multi-year maneuver that affects the entire government and primarily the Ministry of Economy.”

Reconstruction of Minister Giorgetti

Minister of Economic Development Giancarlo Giorgetti on cutting the tax wedge and the difficulties in achieving it gives a different interpretation: “The fact is that when you get to the point, with the 8 billion available in this round (in DL assistance, editor), more has been done: Giorgetti commented that all Political forces who, in words, said they wanted to cut taxes preferred other forms of intervention. The reference to the one-time fee of 200 euros set by the aid decree. For once exhausted many available resources.