“The flat tax or progressivity? I’ll explain Draghi’s move”

The taxes will not increase, there will be no assets, but neither will it be the time of flat tax. This is what the leader of the Brothers of Italy said, Giorgia Meloni, after the meeting with the appointed president Mario Draghi in Montecitorio for the second round of consultations. Meloni said she was sorry because it emerged as Draghi imagines “a taxation marked by progressivity” and which therefore excludes “the flat tax”, which has always been a concern of the center-right to reduce taxation in Italy.

To understand more, however, we have heard Alberto Mingardi, director general of the Bruno Leoni Institute and professor in History of Political Doctrines at the Iulm University of Milan, promoter of a proposal, dated 2017, which provided for the flat tax.

Professor, are progressivity and flat tax incompatible?

“No. Progressivity, foreseen among other things by our Constitution, is not in itself incompatible with the flat tax. In fact, a constitutional reform is not needed to adopt it”.

But how, does the flat tax not provide for a fixed and proportional rate for everyone?

“Yes, exactly. In fact, in our proposal the tax rate on the income of individuals is 25% and it is for everyone”.

So where does progressiveness lie?

“It lies first of all in the combination of a single tax rate and a fixed exempt minimum in nominal terms. It is easy to demonstrate that a progressive system derives from this. Furthermore, in our case, the progressiveness lies in the entire public budget. “Irpef and there is not only the tax authorities. The best redistribution is done with spending. And it is precisely in the public budget as a whole that the progressive effect does not disappear, as required by the Constitution. But I tell you more, already today we have flat rates, as happens for VAT numbers up to 65 thousand euros “.

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So when Meloni excludes the flat tax is it wrong?

“In part, yes because, as mentioned, progressivity and flat tax are not incompatible. But if I have to tell you the truth, I really don’t think the Draghi government will adopt the flat tax reform”.

Because?

“Because it will be composed of a very large majority with parties that have very different identity policies from a fiscal point of view. Lega and Forza Italia say they want a flat tax, the same cannot be said for the Democratic Party”.

And so those who hoped for the flat tax will therefore have to change their mind?

“Yes, also because the Draghi government cannot be expected to do in a short time everything that politics has not been able to do in twenty years”.

But do you always remain convinced of the goodness of the flat tax even after an economic crisis of this type?

“Absolutely. Today we have a very complex tax system. A single rate that is truly the same for everyone can only simplify the mechanism and make it easier to pay taxes. I am thinking above all of younger people with precarious jobs and discontinuous careers. For a reform of this type, however, a very strong political investment and a homogeneous coalition are necessary “.

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