| Abstract [eng] |
The main purpose of this master thesis is after examining how progressive personal income taxation affects output volatility, personal income tax collection, income inequality and public happiness in Lithuania to evaluate the prospects of progressive personal income taxation in the country. The work consists of three main parts; the analysis of literature, the research methodology, the research. In the end conclusion and recommendations are provided. Literature analysis revealed that today, progressive income tax systems exist in nineteen EU countries. The lowest income tax progressivity in 2019 is in Slovakia and Croatia, and the highest - in Austria, Germany and France. The progressive tax system varies greatly across the EU. Income tax rates and income groups are determined individually and are dependent on the political and economic characteristics of each country. Most studies show that tax progressivity has a positive effect on output volatility (as tax progressivity increases, output volatility decreases), as well as a positive impact of progressive taxes on income inequality. However, these effects may not be the same at different times and in different countries, depending on the time period being investigated, the methods and indicators used, as well as country-specific conjuncture differences. The performed research revealed that the greater the progressivity of the taxes, the lower the output volatility. Also, the higher the progressiveness of taxes, the more personal income tax is collected from the population. From the perspective of social justice, greater progressivity of personal income taxation in Lithuania is beneficial in reducing income inequality and ensuring a more equitable redistribution of income. The more progressive tax system, the more satisfied and happier the population will feel. From the economic, social justice and public welfare (happiness) perspectives, progressive personal taxation is a positive phenomenon in Lithuania as it acts as an economic stabilizer, contributes to higher personal income tax collection, benefits in reducing income inequality and ensures a fairer and more equitable redistribution of income. The conclusions and recommendations summarize the main concepts of literature analysis as well as the results of the performed research. The author believes that the results of the study could give useful guidelines to the politicians when taking considerations about changes in income taxation and making laws. |
