The 2022 inflationary spike in Europe has brought renewed interest in fiscal drag. Using harmonised microdata for 21 European countries, this column documents that the progressivity of personal income tax systems gives rise to large tax‑to‑base elasticities, implying substantial potential for fiscal drag if parameters are not adjusted. These effects are more prevalent for labour income and for taxpayers at the bottom and middle of the income distribution. Furthermore, it documents very

Tag-uri: Inflatie