EVALUATION OF THE PERSONAL INCOME PROGRESSIVE TAXATION AND THE SIZE OF TAX-EXEMPT AMOUNT IN LITHUANIA

Egidijus Bikas,Rasa Subačienė,Ieva Astrauskaitė,Greta Keliuotytė-Staniulėnienė

doi:10.15388/ekon.2014.0.3882

Abstract

The tax systems of the European Union countries differ in many features. However, for taxing personal income, many EU countries use the method of progressive taxation. Progressive taxation is aimed to shift the tax burden from those with a relatively low income to those whose income is sufficiently high. Such personal income taxation system creates the prerequisites for social justice. In addition to different income tax rates, in a progressive tax system, a crucial role is played by the size of tax-exempt amount. In this article, personal income progressive taxation and the tax-exempt amount are analyzed as one of the progressive taxation tools. The study was conducted using the method of descriptive analysis as well as forecasting and modeling techniques.

Highlights

IntroductionGovernment revenue is especially closely related with tax policy, because through taxes the economic factors that affect the national market and social policy and allow reducing social exclusion between the rich and the poor sections of society are controlled
Government revenue is the key mechanism ensuring economic growth and development
Some researchers point out that social justice is more favorable for progressive taxation because it better serves the income-redistribution principle, but they note that progressive taxation has rather numerous shortcomings such as high costs of a complicated progressive taxation system or a decrease of efficiency

Summary

Introduction

Government revenue is especially closely related with tax policy, because through taxes the economic factors that affect the national market and social policy and allow reducing social exclusion between the rich and the poor sections of society are controlled. In this case, taxes are the internal guarantee of social development in the country as well. It is important to choose the right system of personal income tax rates – regressive, proportional, and progressive – in order to mitigate the tax burden for persons with a low income. As indicated by J. Slemrod (1996), the issue of tax incidence has been the object of tax philosophy for more than a century; despite

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Conclusion