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Labor and Capital Taxation: Theory and Application in the Czech Republic (in Czech)

Author

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  • Martin Salí
  • Ondrøej Schneider
  • Jan Zápal

Abstract

The paper deals with the theoretical and practical aspects of the taxation of labor and capital in the Czech Republic. The authors show that if the low flexibility of Czech labor is taken into account, progressive taxation could stimulate a higher supply of labor than would a linear tax. The paper then surveys arguments for and against capital tax and builds a tax incidence model inspired by the Harberger model. The authors demonstrate the theoretical possibilities of tax incidence and apply this to the Czech taxation system. The Czech system seems to tax capital more proportionally than labor, which, as the authors argue, reduces long-term capital accumulation by around 20 %: a substantial loss. The authors thus argue that an alternative tax system might stimulate higher economic growth.

Suggested Citation

  • Martin Salí & Ondrøej Schneider & Jan Zápal, 2003. "Labor and Capital Taxation: Theory and Application in the Czech Republic (in Czech)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 53(11-12), pages 539-561, December.
    • Handle: RePEc:fau:fauart:v:53:y:2003:i:11-12:p:539-561
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    File URL: http://journal.fsv.cuni.cz/storage/955_04_539-561.pdf
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    More about this item

    Keywords

    tax theory; tax on capital; tax on labor; Harberger model;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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