IDEAS home Printed from https://ideas.repec.org/a/fau/fauart/v63y2013i6p474-504.html
   My bibliography  Save this article

Distribution of Average, Marginal and Participation Tax Rates among Czech Taxpayers: Results from a TAXBEN Model

Author

Abstract

We present empirical distributions of the average, marginal and participation tax rates on earnings across the population of Czech taxpayers under the current tax-and-benefit system. We quantify significant differences between the taxation of employees and the self-employed: the average tax rates on wage income and business income are 37.4% and 28.1%, respectively, even though the self-employed tend to have higher earnings. On average, employees and the self-employed face effective marginal tax rates of 46.4% and 30.9%, respectively. The tax system exhibits almost no progressivity—the top income decile earns 26.7% of total income and pays 26.7% of total taxes—despite the fact that it is designed to be progressive by providing generous tax credits. There are large dispersions in the tax rates for people with similar earnings.

Suggested Citation

  • Libor Dousek & Klara Kaliskova & Daniel Munich, 2013. "Distribution of Average, Marginal and Participation Tax Rates among Czech Taxpayers: Results from a TAXBEN Model," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(6), pages 474-504, December.
  • Handle: RePEc:fau:fauart:v:63:y:2013:i:6:p:474-504
    as

    Download full text from publisher

    File URL: http://journal.fsv.cuni.cz/storage/1287_dusek.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Yuriy Gorodnichenko & Jorge Martinez-Vazquez & Klara Sabirianova Peter, 2009. "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 504-554, June.
    2. Immervoll, Herwig & O'Donoghue, Cathal, 2002. "Welfare benefits and work incentives: an analysis of the distribution of net replacement rates in Europe using EUROMOD, a multi-country microsimulation model," EUROMOD Working Papers EM4/01, EUROMOD at the Institute for Social and Economic Research.
    3. Martin Feldstein, 1999. "Tax Avoidance And The Deadweight Loss Of The Income Tax," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 674-680, November.
    4. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 1039-1073.
    5. Herwig Immervoll, 2004. "Average and Marginal Effective Tax Rates Facing Workers in the EU: A Micro-Level Analysis of Levels, Distributions and Driving Factors," OECD Social, Employment and Migration Working Papers 19, OECD Publishing.
    6. Ondřej Schneider & Tomáš Jelínek, 2004. "Distributive Impact of Czech Social Security and Tax Systems in Early 2000`s," Working Papers IES 67, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    7. Emmanuel Saez, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Oxford University Press, vol. 68(1), pages 205-229.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Klára Kalíšková & Daniel Münich, 2015. "Dopady zvýšení daňových slev na děti na rozpočty rodin a státu
      [Impact of Increasing Child Tax Credit on Family and State Budgets]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(7), pages 847-859.
    2. Martin Guzi, 2014. "An Empirical Analysis of Welfare Dependence in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(5), pages 407-431, November.

    More about this item

    Keywords

    taxben models; average tax rates; marginal tax rates; participation tax rates; Czech Republic;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fau:fauart:v:63:y:2013:i:6:p:474-504. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lenka Herrmannova) or (Christopher F Baum). General contact details of provider: http://edirc.repec.org/data/icunicz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.