Complexity of Personal Income Tax Design: An Index of Measurement

2009 ◽  
Vol 27 (2) ◽  
pp. 137-154
Author(s):  
Davide Tondani
Keyword(s):  
Income Tax ◽  
Quantitative Measurement ◽  
Personal Income ◽  
Tax Rates ◽  
Tax Structure ◽  
Personal Income Tax ◽  
Effective Tax Rates ◽  
Tax Exemptions ◽  
Gross Income ◽  
Tax Design

Abstract This article puts forward an index of complexity of personal income tax design. Deductions and tax exemptions, etc., are often linked to legal tax brackets in order to increase fairness in the distribution of tax burden. But increased fairness tends to make the tax structure less comprehensible to the non-perfectly informed taxpayer. The proposed index gives a quantitative measurement of the distortion between legal and effective tax rates along the gross income scale and allows for intertemporal and interspatial comparisons. An application of the index to Italian personal income tax concludes the article.

scholarly journals Personal Income Taxation in Poland

Ekonomika ◽  
2008 ◽  
Vol 84 ◽  
Author(s):  
Edyta Małecka-Zieńska
Keyword(s):  
Income Tax ◽  
Value Added ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Tax Rate ◽  
Tax Exemptions ◽  
Tax Deductions ◽  
The One ◽  
Taxation System

The Polish taxation system has been undergoing substantial changes in recent years, aimed at creating a more transparent system and conforming to the taxation standards of market economy countries. The two most important changes were introduction of the personal income tax (PIT) in 1992 and replacement of the turnover tax with the value added tax (VAT) in 1993. The uniform personal income tax covered all incomes generated by natural persons irrespective of where the sources of income are located. The reform provided also a more equitable distribution of the tax burden by introducing a progressive system with three nominal tax rates (in 1992-20%, 30%, 40%).A comparative study of the effective PIT rate for pensioners and other groups of PIT payers is the main goal of this paper. The study refers to our own research on data received from The information of Polish Ministry of Finance about accounting of PIT in several subsequent years. Statistics cover a period from 1993 to 2003. However, numbers of taxpayers refer also to year 1992 when the PIT has been established and a period from 2004 to 2006.Concluding the situation in Poland, taxpayers with the highest income make exhaustive use of tax reductions. There are occurring situations when well-off people benefit more than people with relatively minor income (e. g. pensioners). It happens even if most of deductions were aimed generally at all taxpayers. Such a situation reduces the impression of the system fairness. Because tax deductions reduce budgetary revenues, the foregone revenues have to be compensated by other taxes or / and higher rates. Therefore, the system of deductions and relief, on the one hand, supports the special gains (e. g. house building), however, on the other it generates costs. It is possible that the reduction of tax rate for the I tax bracket and removal of some tax exemptions and deductions would make the Polish personal income tax more transparent, equal and simple.

scholarly journals The concept of fairness as a criterion for the assessment of the personal income tax in Poland

2021 ◽  
pp. 83-96
Author(s):  
Katarzyna Anna Lewkowicz-Grzegorczyk ◽  
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Vertical Equity ◽  
Tax Structure ◽  
Personal Income Tax ◽  
Tax Exemptions ◽  
Polish Society ◽  
The Common ◽  
The Rich ◽  
The One

Purpose – The aim of the article is to present the essence of tax justice in relation to the personal income tax in Poland. Research method – The realisation of the aim required using the method of descriptive and compa-rative analysis to assess the fairness of charging the personal income tax.Results – The results of the empirical study on the personal tax structure point to the progressive tax as the one which better fulfils the concept of tax justice. The common acceptance of the tax progression confirms the deeply rooted sense of vertical equity in the Polish society. According to this, higher taxes should be paid by the rich, while the less wealthy should be charged with lower taxes. Unfortunately, the structure of the personal income tax in Poland does not reflect this. On the basis of the evolution of the PIT tax structure, it is possible to determine flattening of the progression due to the introduction of the two-stage tax scale. What is more, one may experience frequent ethical doubts connected with tax exemptions, and especially with the rules of granting them.Originality / value / implications / recommendations – Author’s own evaluation of the personal income tax in terms of tax fairness.

scholarly journals Optimal progressivity of personal income tax: a general equilibrium evaluation for Spain

SERIEs ◽  
2020 ◽  
Vol 11 (4) ◽  
pp. 407-455 ◽  
Author(s):  
Darío Serrano-Puente
Keyword(s):  
General Equilibrium ◽  
Income Tax ◽  
Optimal Level ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Negative Effects ◽  
Spanish Economy ◽  
Current Scenario ◽  
The Cost

AbstractIs the Spanish economy positioned at its optimal progressivity level in personal income tax? This article quantifies the aggregate, distributional, and welfare consequences of moving toward such an optimal level. A heterogeneous households general equilibrium model featuring both life cycle and dynastic elements is calibrated to replicate some characteristics of the Spanish economy and used to evaluate potential reforms of the tax system. The findings suggest that increasing progressivity would be optimal, even though it would involve an efficiency loss. The optimal reform of the tax schedule would reduce wealth and income inequality at the cost of negative effects on capital, labor, and output. Finally, these theoretical results are evaluated using tax microdata and describe a current scenario where the income-top households typically face suboptimal effective average tax rates.

scholarly journals EUROPEAN PRIORITIES FOR PERSONAL INCOME TAXATION

2020 ◽  
pp. 77-87
Author(s):  
Fedir TKACHYK ◽  
Victoriia OSTAPCHUK
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
European Countries ◽  
Income Taxation ◽  
Social Aspects ◽  
Tax Rates ◽  
The European Union ◽  
Personal Income Tax ◽  
Important Place ◽  
Personal Income Taxation

Introduction. In the current conditions of globalization of socio-economic development and formation of a new financial civilization, social aspects of tax policy take a important place. The system of taxation of income of citizens in Ukraine today is not fully coping with the performance of their functions. The experience of developed European countries on the formation of an effective mechanism of taxation of personal income will contribute to the establishment of the newest social and fiscal-oriented paradigm of taxation of citizens in Ukraine. The increased interest in the procedures for administering the personal income tax is also explained by the fact that this tax is one of the main sources of income to the budget of Ukraine. The purpose is to determine the peculiarities of taxation of personal income tax in Ukraine, to find out the common and different features tax system in Ukraine and European countries, to systematize recommendations on improving the mechanism of taxation of personal income. Results. The international typology of personal income tax systems is given. The general features of personal income taxation and mechanisms of application of personal income tax rates in some countries of the European Union are considered. It is argued that the implementation of the European tax experience will facilitate a faster transition to a new and effective system of personal income taxation in Ukraine. To improve personal income taxation in Ukraine, it is necessary to revise personal income tax rates, increase the amount of tax-free minimum incomes, ensure the full functioning of electronic declaration of personal incomes, optimize concessional policies, increase tax literacy and tax culture. Prospects. Further research will focus on the social aspects of taxing citizens' income in terms of differentiation of tax rates, the logic of using preferences in taxing personal income, the introduction of an effective threshold of the non-taxable minimum income, promoting the right to tax rebates, etc.

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