Minimum and wage floor, two yards to calculate income tax

Since last year, implemented the wage “floor” – which resulted this year $ 225,937– From which workers in a relationship dependency and retirees has achieved Revenues.

For those who exceed this “floor” of salary, the “historical” Minimum Non-Taxable (MNI) applies, which stops for workers in a dependency relationship share of $ 112,682 (single without children) and $ 149,063 (married with 2 children) per month and it is updated once a year according to the evolution of formal wages according to the RIPTE Index (Average Taxable Remuneration of Stable Workers).

A) Yes, There are 2 rods to calculate income tax, based on the income level of the dependent employees.

This “floor” salary debuted last year at $ 150,000 from a project by the head of the House of Representatives, Sergio Massa, giving Executive Power the power to increase it using the standard Only 10% of dependent employees with higher incomes will pay Earnings, as foremen, supervisors, or employers. And between that amount and $ 173,000, a measure was approved to avoid sudden “jumps” in the tax measure. Then, in the face of higher inflation and wage adjustments a few months the $ 150,000 “floor” was adjusted to $ 175,000.

With the application of “flooring”, of the 2.3 million retirees and workers who paid Income in 2020, the number dropped to approximately 950,000“returns to the historic percentage that only 10% of those with the highest incomes pay Earnings,” according to the initiative’s foundations.

Now what for the debate is the “floor” wage increase, over which the Executive Branch is empowered by Congress, with the criterion that keep the 10% paying income constant. And this is happening because due to inflation, parity adjustments and wage increases for those “out of agreement” again, workers who reached Earnings exceeded 10% of the total and began to have Income discounts. And the Government did not use that “delegated power”.

Meaning, automatic update not set but that power is vested in the Executive Branch. Neither an index has been set – for inflation or wages – but it has been established that the new value of the “floor” should be such that it will ensure that the percentage of exempted workers remains constant.

So Sergio Massa asked the Minister of the Economy, Martín Guzmán, that the Government raise the salary to the “floor”, which adds more political friction in the ruling coalition.

Over the weekend, from the Economy they responded that PEN would update the “floor” salary in June.

Union sources take that into account increasing the “floor” to $ 265,000 per month will allow the balance to be maintained for just the same number of tax-paying workers and retirees projected in the 2022 budget. And that in the coming months the numbers will have to be checked in case they get updated again.

On the other hand, the amount of MNI remains unchanged throughout the year in such a way that those who exceed the “floor” of the salary continue to pay tax as they have been doing until then and with the increase in salary they start paying more. . “A serious distortion was formed because the difference in salary between an individual managing a leadership position or having a management position was reduced, due to Income discounts, relative to the income of their constituents. The equivalent is that Congress raises the MNI because of these inflationary levels it cannot have the same value in January as in December ”, according to tax expert Marcelo Rodriguez.

In the case of retirement and pension, the criterion is different. MNI was raised from 6 to 8 of those lowest assets from next month is equivalent to $ 300,200. This MNI applies if certain conditions are met, such as not receiving other income and not being covered by Personal Assets. However, the same “floor” salary amounts also apply if the MNI does not match them.