Tax rate to maximize the revenue: Laffer curve for the Czech Republic

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216305%3A26510%2F12%3APU99079" target="_blank" >RIV/00216305:26510/12:PU99079 - isvavai.cz</a>

Result on the web

<a href="https://acta.mendelu.cz/60/4/0189/" target="_blank" >https://acta.mendelu.cz/60/4/0189/</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.11118/actaun201260040189" target="_blank" >10.11118/actaun201260040189</a>

Result language

angličtina

Original language name

Tax rate to maximize the revenue: Laffer curve for the Czech Republic

Original language description

The aim of this article is to model the relationship between the rate of personal income tax and the revenue it generates, and to derive a tax rate that would maximize this revenue within the Czech Republic, using methodologies described in earlier works (Hsing, 1996). This tax rate represents an upper limit. Overstepping it has negative consequences for corporate fi nances and government budgetary funding alike, because it undermines the workers motivation to work, reduces buying power, and shifts work activities in favor of gray economy. The period of interest is a time series from 1993 to 2010. Two models were devised. The basic research instrument was a second-degree polynomial regression with a logarithmic transformation of the input data. The explaining variable was the tax revenue, the explanatory variable in Model 1 was the ratio of tax revenue to personal gross annual income. Model 2 featured the ratio of tax revenue to gross domestic product. To limit model instability, all data was stated per capita, in 2010 prices. Both models are statistically signifi cant. By comparison, it was determined that, in the period of 1994–2010, the historical tax rate was lower than the rate designed to maximize the revenue. It approached the theoretical optimum most closely in 2007, and deviated from it most severely in 1995.

Czech name

—

Czech description

—

Type

J_ost - Miscellaneous article in a specialist periodical

CEP classification

—

OECD FORD branch

50602 - Public administration

Project

<a href="/en/project/MEB0810138" target="_blank" >MEB0810138: Financial Markets' Influence on Financial Decision Making of #ORIGch and Slovak Corporations under the Conditions of Globalization</a><br>

Continuities

P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)<br>S - Specificky vyzkum na vysokych skolach

Publication year

2012

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis

ISSN

1211-8516

e-ISSN

2464-8310

Volume of the periodical

LX

Issue of the periodical within the volume

4

Country of publishing house

CZ - CZECH REPUBLIC

Number of pages

6

Pages from-to

189-194

UT code for WoS article

—

EID of the result in the Scopus database

—