17.4 The effect of cold progression without a change in tariff with adjustable inflation rate

In the graph below, you can see how the cold progression would work if the tax rates were not adjusted. Starting from the tax rate of one year (pink), you can see the tax burden on a income that remains the same in real terms when it grows with the inflation rate (red). Both the marginal tax rates (thin) and the average tax burden (thick) are displayed. This comparison shows you by how much the tax burden would increase for the same real income. The income regulator gives you the possibility to display the comparison in Euro and in percent. In the second graph, the real tax increase is shown as a percentage of income and in Euro.

You can choose rates between 1958 and 2016.

As can be seen on the other pages, the highest tax burden in percentage is found in the lower range up to an income of 50,000 Euro.


(c) by Christian Bauer
Prof. Dr. Christian Bauer
Chair of monetary economics
Trier University
D-54296 Trier
Tel.: +49 (0)651/201-2743
E-mail: Bauer@uni-trier.de
URL: https://www.cbauer.de