Flat tax for the self-employed, so taxes are increasingly paid by employees – Corriere.it

An analysis by the Study Center of the Catholic University analyzes the impact on taxation of the new government measure introduced by the Meloni government in the budget maneuver: that is, the raising of the flat tax with a fixed rate of 15% for the self-employed for revenues up to 85 thousand euros. The researchers write that in recent decades the progressive emptying of personal income tax has been a constant trend. An increasingly large share of income has been subjected to a coupon taxation that is more advantageous than the progressive tax. The changes introduced by the Meloni government in the maneuver are part of this trend, as they subtract a large part of the income of self-employed workers from the progressiveness of the tax. This poses both equity and efficiency problems and has consequences on both personal income tax and VAT , given that lump sums are also excluded from paying this tax.

According to the analyzes of the Centro Studi della Cattolica a flat-rate electrician would pay over €6,500 less in tax than an identical electrician hired by a company, with income after all taxes and contributions nearly €10,000 higher for the flat-rate electrician than for the employed electrician. A flat-rate IT consultant would save over 3,600 euros in taxes compared to his clone employed in the company, achieving an income after all taxes and contributions approximately 5,500 euros higher. Even if the flat-rate self-employed worker most subject to business risk and does not have all the insurance coverage of the employee (but does not even pay the related contributions) it really seems an excessive advantage, raising serious problems of fair treatment.

The introduction of a flat-rate system that potentially covers a band very large number of self-employed and professional workers entails other potential distortive effects. Meanwhile, it can offer a strong incentive to professional companies to split up to take advantage of the tax benefits guaranteed by the lump sum. This harms the functioning of the market since the organizational form of the firm is typically more efficient than that of many small independent producers, being able to exploit economies of scale and scope (synergies) which are precluded to workers acting individually. Secondly, the expansion of the flat rate can incentivize the company to choose collaboration with a self-employed worker rather than the activation of an employment relationship (the so-called phenomenon of fake VAT numbers).

According to Itinerari Previdenziali, this measure will further accentuate the gap between employees and the self-employed. With a fateful threshold of 35,000 euros gross. Those who have an employee contract beyond this threshold bear social spending almost entirely on their shoulders. The report just presented to the Chamber of Deputies writes that our country, which ranks first in terms of tax evasion, bases all social policies on declared gross incomes and, as regards absolute and relative poverty indices, on declarations relating to weekly expenditure and monthly of a small group of individuals and families selected by Istat. Therefore, according to the Isee, it defines bonuses, subsidies, reductions and recently the contributions to the so-called incompetents (those who declare so little that they cannot fully benefit from bonuses and concessions). The result is that out of 16 million pensioners, almost 46% are totally or partially dependent on the community, having not been able to pay contributions for at least 15 years and therefore not even taxes in 67 years of life; the disabled are around 4 million, the NEETs and illegal workers add up to over 6 million (in almost equal parts). The photograph of the country is all in these meager figures: 12.99% of the population pays 59.95%; while the remaining 87% pay 40%; or we could say that 41.95% pay 91.81% while 44.53% of taxpayers pay only 1.92% of the entire personal income tax.

We are a country of poor people, writes Itinerari Previdenziali, if only 30.327 million citizens out of 59.641 million inhabitants present a positive tax return for 2020means that 49.15% of Italians have no income and therefore live dependent on someone: a percentage that is still significant even if slightly down (-0.98%) compared to 2019 and atypical for a G7 country.

Examining the group of declarants by income bracket in more detail, it appears that:

to) registrants reporting zero or negative income in 2020, increased by another 121,982 unitsafter an increase of 197,730 between 2018/19, for a total of 1,073,205 compared to 951,223 in 2019, 753,493 in 2018 approaching 2017 levels (1,017,044), but in a year of contracting GDP and employment ;

b) those who declare gross income up to 7,500 euros per year increase, albeit slightly (111,221 units) (an average of 312 euros gross per month considering an average income of 3,750 euros) probably thanks to the pandemic bonuses; they are 9,209,590 and represent 22.36% of the total, compared to the 9,098,369 of the previous year.

c) These taxpayers with incomes of up to 7,500 euros pay an average of 22 euros in IRPEF per year (there were 31 in 2019, 32 in 2018 and 36 in 2017), and therefore are totally paid for by the community; d) considering then that each taxpayer corresponds to 1.448 inhabitants (dependent persons, even if not always, as we shall see), these taxpayers correspond to 13,338,188 inhabitants (22.36%) who pay an average IRPEF per capita of 15 euros a year, it was 22 in 2019 as in 2018, while it was 24 euros in 2017.

d) Holders of gross income from 55,000 to 100 thousand euros which are 1,385,974 and pay 18.14% of IRPEF, we obtain that 4.58% pay 38.05% of IRPEF (37.22% in 2019) and, finally including gross income from 35,000 to 55 thousand euros, it turns out that 12.99% (13.22% in 2019 and 13.07% in 2018) pay 59.95% (58.86% in 2019 and 59.95% in 2018) of all Irpef.

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