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Distribution of Income and Taxes in Slovenia and Croatia

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  • Mitja Cok
  • Ivica Urban

Abstract

The purpose of this article is to estimate the redistributive effects of personal income tax (PIT) in Slovenia and Croatia. The decomposition of the Gini coefficient developed by Aronson, Johnson & Lambert reveals only a limited difference between potential and actual redistribution, with this loss being a consequence of the different tax treatment of taxpayers with equal pre-tax income. The results also suggest that Croatia experiences greater income inequality among taxpayers than Slovenia. Another decomposition of inequality measure indicates that some types of income — especially wages — contribute a constant and high proportion to the overall inequality seen in both countries during the period examined.

Suggested Citation

  • Mitja Cok & Ivica Urban, 2007. "Distribution of Income and Taxes in Slovenia and Croatia," Post-Communist Economies, Taylor & Francis Journals, vol. 19(3), pages 299-316.
    • Handle: RePEc:taf:pocoec:v:19:y:2007:i:3:p:299-316
    DOI: 10.1080/14631370701503406
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    References listed on IDEAS

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    1. Kakwani, Nanak C, 1977. "Applications of Lorenz Curves in Economic Analysis," Econometrica, Econometric Society, vol. 45(3), pages 719-727, April.
    2. Peter Lambert & Xavier Ramos, 1997. "Horizontal Inequity and Vertical Redistribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(1), pages 25-37, January.
    3. Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G. & Gerfin, Michael & Gross, Lorna & Hakinnen, Unto, 1999. "Redistributive effect, progressivity and differential tax treatment: Personal income taxes in twelve OECD countries," Journal of Public Economics, Elsevier, vol. 72(1), pages 73-98, April.
    4. Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-270, March.
    5. Plotnick, Robert, 1981. "A Measure of Horizontal Inequity," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 283-288, May.
    6. Aronson, J. Richard & Lambert, Peter J., 1994. "Decomposing the Gini Coefficient to Reveal the Vertical, Horizontal, and Reranking Effects of Income Taxation," National Tax Journal, National Tax Association, vol. 47(2), pages 273-94, June.
    7. van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & Citoni, Guido & Di Biase, Rita & Gerdtham, Ulf-G. & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "The redistributive effect of health care finance in twelve OECD countries," Journal of Health Economics, Elsevier, vol. 18(3), pages 291-313, June.
    8. Aronson, J. Richard & Lambert, Peter J., 1994. "Decomposing the Gini Coefficient to Reveal the Vertical, Horizontal, and Reranking Effects of Income Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 273-294, June.
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    Cited by:

    1. Hrvoje Simovic, 2012. "Effect of expenditures in personal income taxation on horizontal equity in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 36(3), pages 245-267.
    2. Mario Morger & Christoph A. Schaltegger, 2018. "Income tax schedule and redistribution in direct democracies – the Swiss case," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(3), pages 413-438, September.
    3. Tine Stanovnik & Miroslav Verbic, 2014. "Personal income tax reforms and tax progressivity in Slovenia, 1991-2012," Financial Theory and Practice, Institute of Public Finance, vol. 38(4), pages 441-463.
    4. Guangrong Ma & Jianwei Xu & Shi Li, 2015. "The Income Redistribution Effect Of China'S Personal Income Tax: What The Micro-Data Say," Contemporary Economic Policy, Western Economic Association International, vol. 33(3), pages 488-498, July.
    5. Ivica Urban, 2006. "Progressivity of personal income tax in Croatia: decomposition of tax base and rate effects," Financial Theory and Practice, Institute of Public Finance, vol. 30(3), pages 207-231.
    6. Ivica Urban, 2009. "Kakwani decomposition of redistributive effect: Origins, critics and upgrades," Working Papers 148, ECINEQ, Society for the Study of Economic Inequality.

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