Regressive tax

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The declining balance rate is for income tax and social security, a system in which the percentage of tax and contribution burden decreases with increasing income. Tax and contribution payers with a higher income so must thus pay a lower percentage of their income.

Advocacy

Whenever the tax burden is limited by absolute maximum rates, creates a sliding scale. Upon reaching this maximum output limit, the average tax rate from this amount decreases with each added amount of money earned.

Thus, for a maximum of 1 million euros a taxpayer would pay an income of 5 million Euros 1 million euros in income tax. This would correspond to a tax rate of 20%. A taxpayer with an income of 10 million would also have to pay 1 million, but would only be 10 % of his income.

Germany and Austria

In Germany and Austria there is no regressive income tax rate. However, income thresholds result in different social security to a regressive effect and thus favor the higher earners. The discussion in Germany -income-related health insurance contribution (called capitation or health premium ) would further consolidate these degressive course.

Switzerland

In Switzerland, the degressive taxation in 2006 has made it into the public eye when first the Canton of Schaffhausen and then the Canton of Obwalden passed a tax law, which provided for a degressive taxation. The Federal Court note that this tax violates the Federal Constitution because it infringes the general right of equality. This requires that people need in both absolute and relative pay more income and wealth more taxes (judgment of 1 June 2007, 2P.43/2006 / fco ).

UK and USA

As a graduated tax is in the UK and the U.S. often called the "payroll - tax" called. Although, these are not officially a tax because the payroll tax has emerged as a social contribution (national insurance ). Since this tax is but one hand withheld, together with the income tax and the other hand goes beyond the scope of the volume and the type of use they have a financing of social benefits, it is generally regarded as a tax. Since the payroll tax is levied at a fixed tax rate on income and workers only pay this tax, it is considered as an example of a graduated tax. The red curve in the figure on the right shows this degressive course.