19.1 Cold Progression: Austria

The problem of cold progression exists in Austria just like in Germany or Switzerland. It is inherent in all progressive tax systems if they are not indexed to inflation, i.e. if the tariff level limits do not increase according to the inflation ("tax tariff on rolls"). The following illustrations are analogous to the graphs for Germany.

The graph below shows the inflation rates of Germany, Austria, and Switzerland in comparison. (Source: national central banks)

The tax rates are constantly adjusted. In the next graphic, all income tax rates in Austria since 1953 can be displayed. Both the marginal tax rate and the average tax rate are being illustrated. Also, with the slider (red cross) the actual tax burden for a selected income can be indicated. It becomes obvious that the tax rate changes frequently and significantly. In particular, the basic tax-free allowance tripled from 1017 Euro to 3633 Euro in 1974, remained constant for 30 years, and jumped to 10,000 Euro in 2005, which provided significant relief, especially for lower incomes. The maximum tax rate in Austria is for the most part considerably higher than the German rate. Most of the time the top tax rate is 50%. Only from 1972 to 1988 it was 62% and since 2016 55% above a taxable income of 100,000 Euro.

Choose the tax rate of the year:

1953 1957 1962 1967 1970 1972 1974 1982 1989 2000 2001 2002 2005 2009 2016

(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