Brief analysis 9: Income and corporation tax: 35,000 more jobs

The new German government's reform plans to reduce the burden on employees and companies are a step in the right direction. "At the moment, employees only receive a good half of what companies pay for an hour's work. The reason for this is the high taxes, which account for 40 to 50 percent of labor costs," says Tobias Thomas, Director of the economic research institute EcoAustria.

With a corporation tax rate of 25 percent, Austria has long been an attractive location for companies to set up business in the international competition. "In the meantime, however, many countries have lowered their corporate tax rates. Today, Austria is well above the EU average of around 21 percent. This is a disadvantage for the business location," says Thomas. In terms of income tax, the federal government is planning to reduce the first, second and third stages of the tax rate to 20, 30 and 40 percent respectively.

Overall, these measures will lead to more growth, investment, income and employment. "In the medium to long term, the income and corporation tax reform will lead to 35,000 more jobs," says Thomas. Net incomes will also rise by 2.4 percent in the long term. This creates more consumption opportunities for private households. Consumption will increase by 2.7 percent in the long term.

The income and corporation tax reform has a financing volume of around EUR 5.7 billion. These are 40 to 50 percent self-financing due to the growth triggered and the associated additional revenue. Austria is also currently running a budget surplus. In addition, there is still great potential for efficiency in public spending. Against this backdrop, the goals of tax reform and zero deficit can be achieved together.

"However, in order to permanently reduce the tax burden and thus sustainably secure Austria as a business location, it is also necessary to put an end to cold progression. In addition, when it comes to climate protection, it is crucial to find a form of_{CO2 pricing} that achieves the climate targets accurately and cost-effectively," says Tobias Thomas.