The goal of the research was to measure the progressiveness and redistributive effect of income tax by:
- Assembling information about income, reliefs and income tax paid for given taxpayers in several periods in the past; putting the figures in order and calculating the necessary variables;
- Compiling a review of scholarly and research literature in the area;
- Analysis of data and calculation of the necessary indicators;
- Composing the conclusions of the analysis and recommendations for political decision-makers.
Social well-being can be increased either by the rise in overall income or by the reduction of inequalities in the distribution of income. A state endeavours to achieve both of these. By protecting property rights, by investing in education and infrastructure and so on, it endeavours to provide the best conditions for economic growth and development. On the other hand, through progressive taxation and transfers of money to the population with a lower standard of living it endeavours to achieve a redistribution of income. In fact, every move made by the state has some effect on the redistribution of income. Just how much income will be redistributed depends on the preferences of society vis-à-vis inequality.
After both phases of the fiscal process – collection of resources and spending – have been completed, some individuals turn to be out net winners and others net losers. If the net winners are persons with lower incomes, and the net losers persons with higher incomes, then we can say that the fiscal system has reduced inequality. Fiscal processes that reduce income inequality are usually called progressive, while those that increase inequality are called regressive.
The research results are presented in the articles: