III. COUNTRY DETAILS, 2017: ITALY 2017 tax equations The equations for the Italian system in 2017 are mostly repeated for each individual of a married couple. But the spouse credit is relevant only to the calculation for the principal earner and any child credit which the spouse is unable to use is transferred to the principal. This is shown by the Range indicator in the table below. The functions which are used in the equations (Taper, MIN, Tax etc) are described in the technical note about tax equations. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affixes “_princ” and “_spouse” indicate the value for the principal and spouse, respectively. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0. Line in country table and intermediate steps Variable name Range Equation 1. Earnings earn 2. Allowances: tax_al B SSC 3. Credits in taxable income taxbl_cr B 0 4. CG taxable income tax_inc B earn-tax_al1 5. CG tax before credits CG_tax_excl B Tax(tax_inc, tax_sch) 6. Tax credits : emp_cr_max P VLOOKUP(tax_inc, emp_add, 2)) emp_cr_max_s pouse S IF(tax_inc_spouse=0,0,(VLOOKUP(tax_inc_spouse,emp_add,2))) emp_cr P MIN(CG_tax_excl, IF(tax_inc<=’8000,emp_cr_max,’ IF(tax_inc<=’28000,emp_cr_ max+902*(28000-tax_inc)’/20000, IF(tax_inc>55000,emp_cr_max,emp_cr_max* (55000-tax_inc)/27000))))+ S MIN(CG_tax_excl_spouse, IF(tax_in_spousec<=’8000,emp_cr_max_spouse,’ IF(tax_inc_spouse<=’28000,emp_cr_max_spouse+902*(28000-tax_inc_spouse)’/ 20000, IF(tax_inc_spouse>55000,emp_cr_max_spouse,emp_cr_max_spouse* (55000-tax_inc_spouse)/27000))))+ Employment credit Fiscal bonus fiscal_b B IF(tax_inc<=thre_min,0,IF(tax_inc<=thre_max,f_bonus,IF(tax_inc<=’26000, f_bonus*(26000-tax_inc)’/2000))) Spouse credit spouse_cr P IF(Married=’1,’ IF(tax_inc_spouse>Sp_crd_lim,0, IF(tax_inc>80000,0, IF(tax_inc< 15000,800-110*tax_inc/15000, IF(tax_inc>40000,690*(80000-tax_inc)/40000, VLOOKUP(tax_inc,Spouse_cred,2))))),0) Child credit child_cr_princ P IF(Children=0,0,IF(Married=’1,(800*(95000-tax_inc)’/95000+(Children-1)*800* (110000-tax_inc)/110000)*(1-child_crpct_spouse), MAX(800*(95000-tax_inc)/ 95000, IF(tax_inc>80000,0,IF(tax_inc<15000,800-110*tax_inc/15000, IF(tax_inc> 40000,690*(80000-tax_inc)/40000, VLOOKUP(tax_inc,Spouse_cred,2)))))+ (Children-1)*800*(110000-tax_inc)/110000)) child_crfull_spo S use IF(Children=0,0,(spouse_cr=’0)*Married*(800*(95000-tax_inc_spouse)’/95000+ (Children-1)*800*(110000-tax_inc_spouse)/110000)) child_crpct_spo S use IF(child_crfull_spouse>0,IF((CG_tax_excl_spouse-emp_cr_spouse)/child_crfull_ spouse<0.5,0,0.5),0) child_cr_spouse S child_crfull_spouse*child_crpct_spouse Total tax_cr B MIN(emp_cr+spouse_cr+child_cr, CG_tax_excl) 7. CG tax CG_tax B Positive(CG_tax_excl-tax_cr) 8. State and local taxes reg_rt B =IF(CG tax=0;0;IF(tax_inc<12000;0;tax_inc*local_rt))+IF(CG tax=0;0;IF(tax_inc< 35000;tax_inc*reg_rt;tax(tax_inc;reg_rt_sch))) 9. Employees’ soc security SSC B Tax(earn, SSC_sch) 11. Cash transfers J IF(Children=’0,0,12*VLOOKUP(earn_total,’ IF(Married,trans_sch,trans_sch_sp),1+Children)) 13. Employer’s soc security SSC_empr B Tax(earn, Empr_sch) Key to range of equation B calculated separately for both principal earner and spouse P calculated for principal only (value taken as 0 for spouse calculation) J calculated once only on a joint basis. TAXING WAGES 2018 © OECD 2018 367