Share of the Cold Progression in the Overall Progression of the Austrian Personal Income Tax
In recent years, revenues from personal income taxation in Austria have increased substantially. This has provoked an intense debate of the effects of cold progression. A simulation of the revenues from personal income taxation accounting for the impact of inflation for 2010-2013 shows that € 4.6 billion or about 4.1 percent of the overall revenues can be attributed to cold progression. Our analysis also suggests that, even in times of weak real wage growth, substantially less than half of the increase of tax revenues is due to cold progression.