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

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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.

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  • 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
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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, Prague University of Economics and Business, vol. 2015(7), pages 847-859.

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    More about this item

    Keywords

    taxben models; average tax rates; marginal tax rates; participation tax rates; Czech Republic;
    All these keywords.

    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

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