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The optimal top marginal tax rate: Application to Hungary

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  • Aron Kiss

    (Magyar Nemzeti Bank (Central Bank of Hungary))

Abstract

The paper applies recent developments in the theory of optimal income taxation to the Hungarian personal income tax system. The main conclusion is that the optimal top marginal tax rate in Hungary is likely to be higher, perhaps substantially, than the actual rate. It is discussed how this result depends on the parameters describing labor-supply behavior, the income distribution, and the redistributive preferences of society.

Suggested Citation

  • Aron Kiss, 2013. "The optimal top marginal tax rate: Application to Hungary," European Journal of Government and Economics, Europa Grande, vol. 2(2), pages 100-118, December.
    • Handle: RePEc:egr:ejge00:v:2:i:2:p:100-118
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    References listed on IDEAS

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    Cited by:

    1. Lukovszki, Lívia & Gorjanecz, György, 2025. "Két ország, két út: Minimálbérrel élők adóterhei és jó(l)léte Írországban és Magyarországon [Two countries, two paths. Tax burdens and well-being of minimum wage earners in Ireland and Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 488-515.
    2. Aron Kiss, 2013. "The optimal top marginal tax rate: Application to Hungary," European Journal of Government and Economics, Europa Grande, vol. 2(2), pages 100-118, December.
    3. Johannes Hermanus Kemp, 2020. "The elasticity of taxable income: New data and estimates for South Africa," WIDER Working Paper Series wp-2020-29, World Institute for Development Economic Research (UNU-WIDER).

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    JEL classification:

    • 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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