European Financial and Accounting Journal 2015, 10(3):5-14 | DOI: 10.18267/j.efaj.142

Measuring the Effective Tax Burden of Lifetime Personal Income

Jan Vlachý
Jan Vlachý; Associate Professor, Czech Technical University in Prague, Masaryk Institute of Advanced Studies, Kolejní 2a, Prague 6, Czech Republic; <jan.vlachy@cvut.cz>.

This paper designs and tests a comprehensive model, solved by statistical simulation, which describes and quantifies the effect of the tax system and lifelong income characteristics on the effective tax burden of a population or its segment. In the present application the model is structured and calibrated to analyse the category of employed persons in the Czech Republic. The Czech tax and levy system is shown to be mildly progressive, with a steep digression for very high incomes. It is also shown how the initial income endowment, lifelong income volatility and the minimum wage level impact the structure of effective tax rates, as well as expected unemployment.

Keywords: Lifetime tax burden, Personal income, Statistical simulation
JEL classification: C51, H21, H24, J31

Published: October 1, 2015  Show citation

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Vlachý, J. (2015). Measuring the Effective Tax Burden of Lifetime Personal Income. European Financial and Accounting Journal, 10(3), 5-14. doi: 10.18267/j.efaj.142
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