Prague Economic Papers 2015, 24(5):602-617 | DOI: 10.18267/j.pep.550

The Poor or the Kids? Distributional Impacts of Taxes and Benefits Among Czech Households

Libor Dušek1, Klára Kalíšková2, Daniel Münich3
1 CERGE-EI, a joint workplace of Charles University in Prague and the Economics Institute of the Czech Academy of Sciences, Prague, Czech Republic; University of Economics, Prague, Czech Republic (libor.dusek@vse.cz).
2 CERGE-EI, a joint workplace of Charles University in Prague and the Economics Institute of the Czech Academy of Sciences, Prague, Czech Republic; University of Economics, Prague, Czech Republic (klara.kaliskova@cerge-ei.cz).
3 CERGE-EI, a joint workplace of Charles University in Prague and the Economics Institute of the Czech Academy of Sciences, Prague, Czech Republic (daniel.munich@cerge-ei.cz).

This paper provides an up-to-date analysis of the redistributive effects of the Czech tax and benefit system at the household level. We provide several measures of the extent in which the tax and benefit system redistributes from the rich to the poor and from the childless households to the households with children. We find a rather weak combined power of the tax and benefit systems in alleviating income inequalities. The system redistributes primarily towards households with children. While households with children earn 55 per cent of total earnings, they pay 39 per cent of total taxes and receive 68 per cent of total benefits. Even the richest households with children contribute a lower share of total net taxes (8 per cent) than their share in total earnings (10 per cent). About a quarter of households with children in the upper income deciles collect some benefits while only half of the poorest households without children do.

Keywords: TAXBEN models, redistribution, income inequality, Czech Republic
JEL classification: H22, H24, H55, I38

Published: January 1, 2015  Show citation

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Dušek, L., Kalíšková, K., & Münich, D. (2015). The Poor or the Kids? Distributional Impacts of Taxes and Benefits Among Czech Households. Prague Economic Papers, 24(5), 602-617. doi: 10.18267/j.pep.550
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