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Personal Income Taxation in a Context of a Tax Structure

Procedia Economics and Finance
DOI: 10.1016/s2212-5671(14)00391-8
  • Personal Income Tax
  • Tax Structure
  • Single Worker Taxation
  • Taxation Of Average Wage
  • Competitiveness
  • Economics
  • Political Science


Abstract The paper examines importance and disparities of personal income taxation in a context of a tax structure. The attention is focused on single worker taxation with the average wage in 21 selected European countries, OECD as well as the European Union members. Importance of personal income taxes is not only in their financial contribution to the public budgets (in average, personal income taxes are the second most important source of tax revenues in line with Eurostat tax classification), but also in their impact on other government policies and goals (e.g. an economic growth, a redistribution, country's competitiveness, a functioning of labour markets or fiscal federalism) at the same time. Finally, paper explores relation between PIT share on total taxation and average PIT rate for a single worker with the average wage. Results indicate that increasing PIT share on total taxation by 1 percentage point increases the PIT rate by 0.57 percentage point. It confirms the importance of PIT rates for total tax revenues. Paper uses standard scientific method, e.g. description, comparison, analysis, synthesis. The OECD wage database, “Taxes in Europe” database and national statistical offices are the main data sources.

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