Applied Aspects of Progressive Taxation of Personal Income

Abstract

In 2018 and 2019, the author published a number of articles on progressive taxation of personal income. The concept of fair taxation, formulated using the utility function, was introduced and put into mathematical form, illustrative examples of such taxation were built. In this article, this topic is updated, but with an emphasis on the possible practical use of the results obtained. All calculations were carried out on the basis of a detailed distribution of taxable income by groups of taxpayers, built on the reporting data of 2020. This made it possible to compare the results obtained with the real taxation of personal income. Specific variants of the progressive tax function were built and analyzed, providing a reduction in tax payments for 90% of taxpayers with low incomes, subject to the condition of acceptability of tax rates applied to high and ultra-high incomes. An important conclusion was made about the possibility of applying a specific five-step scale of tax rates at the initial stage of transition to progressive taxation of personal income.