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Analýza daňových systémů středoevropských zemí pomocí statistické simulace
[An Analysis of Central European Tax Systems Using Statistical Simulation]

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  • Jan Vlachý

Abstract

This paper uses a parametric statistical simulation (Monte Carlo) model to investigate and com-pare the effective lifetime tax burden on variable incomes for private-sector employees in the Czech Republic, Slovakia, Poland and Hungary, based on current rates and calibrated against actual income distributions. It is shown that the existing Czech system is highly inefficient, lacking horizontal as well as vertical equity, and this is aggravated by increased income volatility. On the other hand, higher income risk in all countries, except Hungary using flat tax, results in less progression than expected, primarily due to the existence of a minimum wage, which effectively serves as insurance, and which the dynamic model captures as a system feedback. This finding may contribute to a reassessment of existing assumptions on the detrimental effect of progressive tax systems on the incentives of individuals to undertake risky decisions, such as investments in human capital.

Suggested Citation

  • Jan Vlachý, 2017. "Analýza daňových systémů středoevropských zemí pomocí statistické simulace [An Analysis of Central European Tax Systems Using Statistical Simulation]," Politická ekonomie, Prague University of Economics and Business, vol. 2017(4), pages 410-423.
    • Handle: RePEc:prg:jnlpol:v:2017:y:2017:i:4:id:1152:p:410-423
    DOI: 10.18267/j.polek.1152
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    More about this item

    Keywords

    lifelong tax burden; personal income tax; risky incomes; statistical simulation; public finance; Visegrad Group;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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