Is the sales tax progressive or regressive?
The tax rate refers to those percentages or absolute DM amounts with which the tax assessment bases are multiplied in whole or in part in order to calculate the amount of the tax. Depending on the type of tax, the tariff can be designed differently and based on different basic ideas. The following tariffs apply to the most important taxes: The income tax has a progressive tariff (tariff, progressive) with the top rate of 56%. The corporation tax is generally levied at a rate of 56%. In the case of profit distributions from corporations with unlimited tax liability, it is reduced to 36%, whereby this “distribution tax” is offset against the income tax liability of the domestic shareholder. At the VSt the tariff is 0.5% for natural persons and 0.7% for legal persons; Both GewSt, the tariff is variable due to the community-specific assessment rates. The USt has a proportional tariff (tariff, proportional) of 13% and in exceptional cases 6.5%, while the ErbSt has a progressive tariff depending on the level of the assessment base and the degree of kinship. For most types of tax, an allowance or an exemption limit must be taken into account before applying the tariff.
informs about the amount of tax to be paid (tax liability T) for a certain amount of the tax base (X). It thus indicates the functional relationship between the tax base and the tax amount T = T (X). In tax rate theory, a distinction is made between average tax rate and marginal tax rate, which can be used to characterize the level and structure of a tariff. Depending on the change in the average tax rate when the tax base changes, the tax rate theory differentiates between three types of tariff: proportional tax rate, progressive tax rate (tax progression) and regressive tax rate (tax regression). The tax rates actually implemented are usually not these ideal-typical rates, but combinations. The tax rate in a broader sense also includes tax exemptions, tax exemption limits, deductibility and creditability, as well as the splitting procedure.
expresses the functional relationship between the tax base (X) and the tax amount to be paid (T): T = T (X). To mark a tariff as progressive, proportional or regressive, the change in the average tax rate (T / X) when the tax base changes. With a progressive tariff, T / X increases with increasing X.
(German sales tax). The German sales tax law has a linear tariff in the form of two tax rates. The standard tax rate is 19% and the reduced tax rate is 7%. As already indicated, this reduced rate is used for sales of goods for the basic supply. In addition, there are a number of exemptions from sales tax in the field of health care, money supply, housing, etc.The standard tax rates in Germany have increased from 10% to 19% from 1968 until today, the reduced tax rates from 5% to 7%. The collection of sales tax and the reimbursement of input tax are done in one procedural step. As a taxable person, the entrepreneur has to submit monthly sales tax returns. In these he has to calculate the sales tax himself on the basis of his output sales and to balance it with the sales tax paid by him on purchased intermediate goods (input tax). A positive amount is to be paid to the tax office, a negative amount is reimbursed by the tax office. See also sales tax (with references).
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