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Institute of Public Finance

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Tax wedge in Croatia, Belgium, Estonia, Germany and Slovakia

Ana Gabrilo, Deloitte d.o.o., Zagreb, Croatia

The aim of this paper is to analyse the taxation of labour income in Croatia, Belgium,Estonia, Germany and Slovakia. Having presented an outline of tax system rules, the paper shows the decomposition of the net average tax wedge for different family types and different income levels based on the OECD methodology. The results show that all observed countries apply a progressive tax schedule, apart from Germany where taxation for higher gross wages is not progressive due to a  cap on the SIC base. When it comes to a taxpayer earning an average gross wage, a Croatian single worker without children has the lowest tax burden, followed by Estonia, Slovakia, Germany and Belgium. However, as regards taxpayers earning 400% of AGW, Estonia has the smallest tax wedge, followed by Slovakia, Germany, Croatia and Belgium. Similar results are obtained by analyzing the tax wedge for couples with two children where one spouse is out of work.

Keywords:  taxation of labour income; progressivity; tax wedge; Belgium; Estonia; Germany; Slovakia; Croatia

Year:  2016   |   Volume:  40   |   Issue:  2   |   Pages:  231 - 264   

Full text (PDF)   |   DOI: 10.3326/fintp.40.2.4   |   E-mail this article   |   Download to citation manager
 June, 2016
II / 2016
EBSCO Publishing
ISSN 1846-887X
e-ISSN 1845-9757
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