Does Tax Progressivity Affect Personal Income Tax Revenue? An Empirical Analysis of the European Union Countries

Purpose: This paper examines the impact of artificial intelligence (AI) development on labour taxation and personal income tax (PIT) revenues in EU member states. It analyses whether the diffusion of AI technologies has influenced the structure and dynamics of labour-related tax revenues and identifies key fiscal implications associated with labour market transformation and automation processes. Design/methodology/approach: The study applies a quantitative, comparative approach based on panel data from 21 EU countries for 2021-2023, a period characterised by accelerated post pandemic digitalisation. Due to non-normal data distribution, Wilcoxon signed-rank tests were used to assess changes in PIT revenues and labour taxation as shares of GDP and total tax income. A random-effects panel model was estimated to examine the relationship between labour taxation and digital development (DESI). Spearman’s rank correlation was used to assess the association between the AI Preparedness Index and GDP per capita. Data were obtained from Eurostat, the National Tax List, DG CONNECT, and Oxford Insights. Findings: The results indicate a temporary deterioration of labour-based tax revenues between 2021 and 2022, followed by a statistically significant rebound in 2022-2023. These short-term fluctuations appear linked to post-pandemic recovery dynamics rather than long-term structural shifts. The panel model does not confirm that higher labour taxation supports digital development; instead, rapid improvements in DESI reflect EU-wide dynamics rather than national fiscal structures. A strong positive correlation between AI readiness and GDP per capita highlights persistent disparities, with wealthier economies more capable of adopting advanced technologies. Overall, the fiscal effects of AI diffusion remain uneven across the EU and strongly dependent on countries’ economic and digital maturity. Research limitations/implications: The analysis covers a short three-year period and relies on aggregated indicators, which may not fully capture the long-term or sector-specific fiscal effects of AI. Future research should incorporate longer time series, additional tax categories (e.g., CIT, VAT), and more detailed labour-market indicators. Practical implications: Policymakers should anticipate potential revenue shifts resulting from automation and adjust fiscal frameworks to ensure balanced taxation between human labour and AI-enabled production.Social implications: As AI reshapes employment structures, its development may influence income distribution and social stability. Strengthening redistribution mechanisms and reskilling programmes remains essential to mitigate potential inequalities. Originality/value: This study provides one of the first empirical assessments of AI’s fiscal implications for labour taxation and PIT revenues across EU member states, offering relevant insights for researchers and public finance policymakers.

The research explores personal income tax progressivity as a mechanism to reduce income inequality. In the personal income tax progressivity model with data from 1988-2005, the unbalanced panel has up to 103 countries with 1,528 observations. The unbalanced panel uses Driscoll and Kraay standard errors to adjust for nonparametric heteroscedasticity autocorrelation. The researchers test the top, marginal, and average personal income tax rate progressivity. In the full panel, the top, marginal and average rate of personal income tax progressivity are all statistically significant. The models also explore differences in results based on income level. Key findings include the average rate of personal income tax progressivity is statistically significant in the more panels than the marginal rate of income tax progressivity or the top marginal rate. Both the net and market Gini coefficients tend to have similar statistical significance results which may suggest equality promoting policies may cause structural changes in the economy that lead to higher pre-tax incomes for lower-income individuals.

Purpose - Assessment of the willingness of municipalities to use the tax authority granted to them, in the scope of using local tax policy instruments in the field of real estate taxation, as a consequence of changes in personal income taxation. Research method - The fiscal effects of changes in tax law were assessed based on an economic analysis of the law. Descriptive statistics measures were used to analyse changes in revenues from taxation of personal income and the size of the loss of revenues due to tax expenditures in revenues from real estate taxation. A critical analysis of the literature on the subject was carried out. The empirical study covered all municipalities in Poland. The data was obtained from budget reports Rb-27S and SP-1 for 2019–2023. Results - The analysis of changes in the Personal Income Tax Act enables to determine that in the last two decades, what has had the most significant impact of tax law changes on municipalities' revenues was the introduction of the Polish Deal in 2022. It was found that in addition to changes in tax law in 2019–2023 the fiscal importance of municipalities’ shares in personal income tax revenues in 2019–2023 depended on the economic situation, particularly in revenues from taxation of personal income from business activities. Significant differences were found in the willingness to use tax expenditures within real estate taxation policy depending on the municipality type. In particular, the type of tax expenditures provided by cities with county rights was specific. Especially in the years 2020–2023, tax exemptions were more critical concerning reducing tax rates in real estate tax. Originality / value / implications / recommendations - An original approach to analysing municipalities’ decisions regarding real estate taxation policy was projected, assuming the impact on local tax policy of decisions of central authorities, independent of municipalities, regarding the taxation of personal income. The adopted assumptions allow for an In-depth analysis of the effects of central government tax policy by identifying the variances in the reactions of local government authorities in the field of real estate taxation.

Despite rising federal income tax rates, verging on pre-emption of the income tax field during the war years,' state governments have been able to report a gradual increase in personal and corporate income tax revenue since 1933. State income from this source has risen from $153 million in 1932 to $1,084 million in 1948. The income tax has bettered its position in relation to all other state taxes. In 1932 income tax collections contributed 8 per cent of the total state tax revenue; by 1948 personal and corporate income taxes provided 14 per cent of total state tax revenue (including the unemployment compensation tax). A partial explanation for the increase in revenue derived from income taxation is the fact that 13 states adopted personal or corporate income taxation or both between 1933 and 1938.2 The steady growth of the national income since 1933, however, is primarily responsible for the advance in state income tax collections. It is against this background of rising national income that the comparatively insignificant role of the state income tax and the growing federal domination of the income tax field are most sharply revealed. (See Chart 2.) Any analysis, therefore, of recent trends of state income tax revenue must of necessity take into account the relationship to the federal income tax. In striking contrast to federal income tax experience the increase in state income tax since 1933 has barely kept pace with the growth of the national income. In fact, from 1942 to 1945 state income tax collections declined in relation to national income payments. Downward revisions of the personal income tax contributed to this relative decline of state income tax revenue. Confronted with treasury surpluses during the war, several state legislatures acceded to demands for tax relief in view of the mounting federal income tax rates. New York led the way with a 25 per cent personal income tax reduction in 1942. West Virginia and South Dakota repealed their personal income tax laws in 1943. In the same year the Wisconsin state legislature failed to extend the temporary 60 per cent surtax on individual income; California and Oregon reduced personal rates substantially; and Iowa and Maryland decreased the taxpayer's liability by granting liberal tax credits.3

One of the reasons behind declining budget revenues can be external migration. This article aims to describe the methodology for estimation of tax losses and revenues from international labor migration for specific types of taxes. Changes in personal income tax revenues are estimated by using the data on the number of labor emigrants (immigrants) for specific occupations, nominal gross monthly wage of employees in this occupation in Russia, standard child tax deductions and the corresponding personal income tax rate for residents (non-residents). Changes in VAT and excise tax revenues caused by the current trends in labor migration are estimated in accordance with the structure of household consumption. The amount of tax revenues (and losses) is calculated as the product of the sum of VAT and excise tax payments made by one member of a household per year when buying goods, works and services on the territory of Russia, and the number of emigrants (or immigrants). The research uses the data provided by Rosstat, Federal Tax Service of Russia and the Analytical Centre under the Government of the Russian Federation for 2012–2017. The conclusion is made that international migration has a negative impact on the tax revenues of the country’s consolidated state budget. Although, throughout the whole of the given period, the balance of additional revenues from VAT, excise taxes and the personal income tax (PIT) on earned income and budget losses from these taxes remained positive, in absolute terms, this balance decreased significantly. Trends in international labor migration affected the balance of tax losses and revenues. Therefore, the government’s attempts to target international labor migration by reforming the tax legislation seem quite reasonable: the upcoming tax reforms will include the introduction of the concept ‘centre of vital interests’ as the second criterion of residence and equalization of the PIT rate for tax residents and non-residents. The proposed methodology can thus prove to be an effective tool for the Federal Tax Service of Russia to estimate the resulting changes in tax revenues as well as other changes related to labor migration processes.

This paper examines the impact of population aging on personal income tax (PIT) revenue in Vietnam for the period 2014–2030. With the assumptions of a changing tax base and growing real gross domestic product (GDP), the total PIT revenue is projected to increase in absolute terms. However, the projected total PIT revenue as a percentage of GDP under an aging population and the counterfactual results (without aging population) show a negative impact on PIT revenue in the studied period.

This paper uses a microsimulation approach to analyse the phenomenon of “fiscal drag” in Greece, i.e. the increase in tax revenues that arises when nominal tax bases grow, while the parameters of the personal income tax (PIT) system remain unchanged in nominal terms. First, we estimate the phenomenon in terms of the tax-to-base elasticity, which captures the responsiveness of PIT revenue to changes in the tax base under an unchanged legislation. The results suggest an elasticity of almost 1.8 in 2019, implying a built-in progressivity in the PIT system and, therefore, potential for fiscal drag. We further decompose this elasticity to identify its main drivers across income sources (labour, capital, self-employment, pensions and benefits) and tax parameters (tax brackets, tax deductions/credits) as well as across the income distribution. Second, we assess fiscal drag in practice between 2019 and 2023 by comparing actual PIT revenues (incorporating observed income growth and legislative changes) against counterfactual 2023 scenarios simulating alternative indexation practices. We quantify the actual impact of fiscal drag, defined as a share of GDP, and the extent to which government policies have managed to offset it. The findings indicate that, although Greece has no formal indexation of tax parameters, the tax policy reforms implemented between 2019 and 2023 more than offset the potential effects of fiscal drag, keeping PIT revenues broadly stable as a share of GDP, while slightly reducing the average effective tax rate. Overall, the results highlight that, during a period of rapid nominal income growth, Greece’s PIT reforms improved both the progressivity and the redistributive capacity of the tax system, while safeguarding PIT revenue. These insights are relevant for the design of future tax policy interventions.

The COVID-19 pandemic has put a great strain on the Russian economy and budget revenue. The study aims at furnishing an estimate of losses in personal income tax revenue in regional government budgets in 2020–2023 due to the COVID-19 pandemic. In order to investigate the shortfall in tax revenues, three factors were studied: the amount of damage caused by the COVID-19 outbreak to the whole economic system; the sensitivity of the state revenue base to the crisis; the sensitivity of regional tax revenue to the revenue base. The study was based on the annual reports of the Federal Tax Service of Russia, Rosstat data, Forecast of the Social and Economic Development of the Russian Federation, and data from the “National action plan to ensure the recovery of employment and incomes of population, economic growth and long-term structural changes in the economy”. It was found that recession will lead to a significant reduction in people’s income over the given period. As a result, personal income tax revenues will decrease. The budget losses will reach 416.6 billion rubles by the end of the 2020 fiscal year. This is equivalent to 0.4% of GDP and 9.7% of total income from personal income tax in an economic situation unmarred by the pandemic. The largest fall in public revenue is expected in the regions which stand out in regard to personal income tax revenues per capita. The research results confirm the initial hypothesis that the negative impact of the pandemic on personal income tax revenues depends on the share of income tax revenues of a particular region or municipality. The findings can be used by the regional and municipal financial authorities for developing draft budgets for 2022 and the planning period of 2023–2024.

The main objective of the study was to investigate the impact of Federal Government tax revenue on economic growth in Nigeria spanning from 1986 – 2024 and variables employed were; Petroleum Profit tax Revenue (PPTR), Company Income Tax Revenue (CITR), Value Added tax revenue (VATR), Excise Duties Tax Revenue (CEDTR), and Personal Income Tax Revenue (PITR). Data were sourced from the Federal Inland Revenue Services (FIRS) publications and the Central Bank of Nigeria (CBN) Statistical Bulletins. The study adopted an ex-post factor research design and the model was specified using Vector Error Correction Model (VECM) and Public Finance Economic Theory was used as a theoretical framework. Vector Error Correction Model (VECM) as an econometric technique of data was used in the estimation of the parameter estimates. The findings of the study revealed that Petroleum Profit tax Revenue (PPTR) had a statistically and insignificant positive (1.42662) impact on economic growth (GDP) in Nigeria in the short-run but it had a statistically and significant positive impact on (GDP) in the long run. The findings of the study revealed that Personal Income Tax Revenue (PITR) had a statistically and insignificant positive (1.890096) impact on economic growth (GDP) in the short-run and it had a statistically and significant positive (2.696599) long-run in Nigeria. Based on the findings of the study, the study recommended that the government should intensify efforts in sustaining the positive and significant impact of PPTR and PITR on economic growth in Nigeria for more revenue generation. The main objective of the study was to investigate the impact of Federal Government tax revenue on economic growth in Nigeria spanning from 1986 – 2024 and variables employed were; Petroleum Profit tax Revenue (PPTR), Company Income Tax Revenue (CITR), Value Added tax revenue (VATR), Excise Duties Tax Revenue (CEDTR), and Personal Income Tax Revenue (PITR). Data were sourced from the Federal Inland Revenue Services (FIRS) publications and the Central Bank of Nigeria (CBN) Statistical Bulletins. The study adopted an ex-post factor research design and the model was specified using Vector Error Correction Model (VECM) and Public Finance Economic Theory was used as a theoretical framework. Vector Error Correction Model (VECM) as an econometric technique of data was used in the estimation of the parameter estimates. The findings of the study revealed that Petroleum Profit tax Revenue (PPTR) had a statistically and insignificant positive (1.42662) impact on economic growth (GDP) in Nigeria in the short-run but it had a statistically and significant positive impact on (GDP) in the long run. The findings of the study revealed that Personal Income Tax Revenue (PITR) had a statistically and insignificant positive (1.890096) impact on economic growth (GDP) in the short-run and it had a statistically and significant positive (2.696599) long-run in Nigeria. Based on the findings of the study, the study recommended that the government should intensify efforts in sustaining the positive and significant impact of PPTR and PITR on economic growth in Nigeria for more revenue generation.

The article evaluates the influence of the tax progressivity of the personal income tax on tax revenue in the Czech Republic. The first part of the study deals with the analysis of tax progressivity. In the next part, the indicator of tax progressivity is used as a variable of the regression model examining its effect on tax revenue. The analysis is carried out for the period 1993-2020. For part of the period, the nominal tax rate was progressive, for part of the period, on the contrary, it was linear. This approach to solving the research topic is thus unique and creates added value to the text. This is due to the length of the examined period, the alternative approach to measuring tax progressivity, and the way the tax base from dependent activity was constructed in the Czech Republic for part of the period.

The paper deals with an analysis of the tax progressivity of personal income tax on dependent activity in the Czech Republic in the period 1993-2018.The personal income tax had a progressive rate in the past. Since 2008, the tax rate has been linear, complemented since 2013 by a solidarity tax increase. The analysis results show that in spite of the linear tax rate, the personal income tax in the Czech Republic is not linear. In most cases, the income tax has a progressive character due to the non-taxable part or tax reliefs. For taxpayers with above-average income, the situation is opposite and their tax liability was regressive in the period 2008-2012.

This study aims to determine the influence of tax audits and tax sanctions on the income tax (PPh) revenue from individual taxpayers at the Pratama Tax Office (KPP) Bandung Bojonagara during the 2016–2024 period. The research method used is a quantitative research method with a multiple linear regression analysis model. The data used is secondary data. The results of the study show that Tax Audit partially has no effect on Personal Income Tax Revenue, while Tax Sanctions partially have a significant effect on Personal Income Tax Receipt. Tax Audit and Tax Sanctions simultaneously have a significant effect on Personal Income Tax Revenue.

Theoretical background: Numerous theoretical analyses have examined the issue of municipalities’ capacity to generate their own revenue (referred to as revenue potential or financial independence) or, more broadly, the assessment of municipal financial management (understood as financial autonomy or fiscal stability). However, empirical studies focusing on the impact of specific factors on these processes are relatively rare. Purpose of the article: The purpose of the article is to identify factors describing regional transformation and to develop a model explaining their impact on the tax revenue of municipalities in the Silesian Voivodeship, using personal income tax revenue as an example. Research methods: An in-depth literature review was conducted to identify and systematize factors describing regional transformation. The research employed panel regression with random effects to determine the impact of selected factors describing regional transformation on personal income tax revenue in the municipalities of the Silesian Voivodeship. The factors describing regional transformation were categorized into social, economic, and environmental-spatial dimensions. The study ultimately utilized indicators representing the influence of selected factors, considering their data availability and quality, as well as the need to maintain their independence as explanatory variables in the model. As a result, a model was developed to explain the relationship between changes in personal income tax revenue and changes in population size, as well as the number of unemployed individuals. The study covered 49 urban municipalities (including cities with county rights) in the Silesian Voivodeship from 2012 to 2022. Main findings: The developed model made it possible to assess the sensitivity of changes in personal income tax revenue to changes in population size and the number of unemployed individuals in the Silesian Voivodeship. Additionally, the model provided insights into the extent to which these factors explain changes in personal income tax revenue, offering a foundation for further research on the impact of regional transformation on the tax revenue of local government units. The attempt to develop the model also led to recommendations for improving data collection, facilitating more effective monitoring of regional transformation.

The contribution of personal income tax to gross national income is assessed in this study.Over the years, tax revenue has been an important government source of income to finance public goods and services.In Nigeria, the tax structure includes personal income tax (PIT) as well as other direct and indirect taxes.There is PIT collection by both the state and federal governments.This study examines the influence of PIT on aggregate income of the country from 2011 to 2020 using ordinary least squares method.The dependent variable is the gross national earnings while the independent variable is the personal income tax collected at the federal government level in Nigeria.The study finds corruption and inflation as two useful control variables that have direct influence and link with individuals' tax compliance in Nigeria.The data sources include the Organization for Economic Co-operation and Development (OECD) for PIT figures, Transparency International (TI) for Corruption Perceptions Index (CPI) data and World Bank Economic Indicators for Gross National Income (GNI) and inflation statistics.The empirical findings reveal that PIT has a significant positive influence on the gross national income.The moderating variables applied are not significant and could not explain the vicissitudes in the gross national earnings.The study recommends improvement in the PIT administration to boost tax revenue collections and remittances to the government treasury.Further suggestion by this study is that corruption and inflation should be minimized to enhance PIT collection at both federal and state government levels.

Personal Income Tax Progressivity and Output Volatility: Evidence from OECD Countries