The indexation of subsistence differs from other incomes. When wages follow, on average, an index wi, the real subsistence index rsi commonly follows the net average wage, i.e. the wage after taxes.
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W = the average wage (nominal)
W[0] = the average wage in the base year wi = wage index = W / W[0] rwi = real wage index = wi / P B[0] = subsistence in the base year h = B[0] / W[0] rsi = real subsistence index rnai = real net average wage index |
(13.3a) W = W[0] wi = W[0]
rwi P
(13.3b) Subsistence = B = B[0] rsi P
(13.3c) rsi = rnai = Net[W] / P / Net[W[0] (13.3d) |
Deduction of the real net average income index
We choose the base year so that x[0] = B[0]. Let W[0] be the average wage in the base year, and let h = B[0] / W[0] be the base year ratio with subsistence. Then the index of real (net) subsistence rsi is set to the index of the real net average wage rnai, and is (proving (13.3d)):
with B[0] = W[0] h:
