de.euronews.com
EU Real Net Income: 2024 Report Highlights Disparities
A 2024 OECD report reveals that seven EU countries experienced a decrease in real net income due to higher tax rates exceeding real wage growth, while Germany saw a slight increase; this is partly attributed to 'bracket creep', where inflation pushes people into higher tax brackets.
- What factors caused the decline in real net income in several EU countries in 2024?
- In 2024, seven EU countries experienced a decline in real net income compared to the previous year, most significantly in Italy, Estonia, Czechia, France, Greece, Belgium, and Spain. Germany saw a slight 0.5% increase. This analysis considers a single, average-wage earner without children, factoring in taxes, social contributions, and inflation.
- How did differing tax policies in countries like Portugal and the UK lead to contrasting outcomes in real net income?
- The decrease in real net income in several EU countries resulted from a disproportionate rise in average personal tax rates (including income and social security contributions) compared to real wage growth. For example, Italy saw a 3.9% average wage increase, but a 7.5% rise in average tax rates, negating much of the wage gain. Similar trends occurred in Estonia and Czechia.
- What policy adjustments could mitigate the effects of "bracket creep" and protect average wage earners from decreased purchasing power due to inflation?
- The disparity between wage growth and tax increases highlights the impact of "bracket creep," where inflation pushes individuals into higher tax brackets, increasing their average tax rate without a real income increase. This is exacerbated by the failure to index income taxes to inflation, leading to decreased purchasing power for average wage earners in several EU countries. Measures like indexing income tax to inflation could mitigate this.
Cognitive Concepts
Framing Bias
The article frames the issue by highlighting the negative impacts of decreased net income in several European countries. While presenting data on countries with increases in net income, like Portugal, the UK, and Turkey, the initial focus on the negative examples shapes the reader's overall perception. The headline, if present (not provided in the text), would strongly influence this framing.
Language Bias
The language used is mostly neutral, presenting facts and figures. However, terms like "drastisch" (drastically) in reference to tax increases could be considered loaded, although the context provides sufficient data to contextualize this. Replacing it with a more neutral term like "significantly" would improve objectivity.
Bias by Omission
The article focuses primarily on the seven EU countries with the largest decreases in net income, potentially omitting other countries' experiences and creating a biased representation of the overall situation. While acknowledging limitations due to space, a broader overview would enhance the analysis. Additionally, the article doesn't explore potential reasons behind the increased tax rates in different countries, beyond mentioning specific instances like the abolishment of tax breaks in Estonia or increased social security contributions in the Czech Republic. This limits the depth of understanding regarding the broader economic policies at play.
Sustainable Development Goals
The article highlights a decrease in real net income after taxes in several EU countries in 2024, exacerbating income inequality. Higher taxes and inflation disproportionately impact lower and middle-income earners, widening the gap between the rich and poor. The impact is particularly stark in Italy, Estonia, Czechia, France, Greece, Belgium, and Spain, where real net income decreased. This contrasts with countries like Portugal, the UK and Turkey, showing the uneven distribution of economic benefits across the EU.