Optimal Labour Income Taxation in Poland: The Case of High-Income Earners
In this paper, we use actual data provided by the Polish tax authority and characterise the properties of income distribution in Poland in the case of high-income earners. By employing a variety of techniques we are able to confirm that the distribution of income in Poland can be approximated with a...
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| Format: | Article |
| Language: | English |
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Collegium of Economic Analysis, SGH Warsaw School of Economics
2023-03-01
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| Series: | Gospodarka Narodowa. The Polish Journal of Economics |
| Subjects: | |
| Online Access: | https://gnpje.sgh.waw.pl/Optimal-Labour-Income-Taxation-in-Poland-The-Case-of-High-Income-Earners,159031,0,2.html |
| _version_ | 1827975384297111552 |
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| author | Maciej Dudek Paweł Dudek Konrad Walczyk |
| author_facet | Maciej Dudek Paweł Dudek Konrad Walczyk |
| author_sort | Maciej Dudek |
| collection | DOAJ |
| description | In this paper, we use actual data provided by the Polish tax authority and characterise the properties of income distribution in Poland in the case of high-income earners. By employing a variety of techniques we are able to confirm that the distribution of income in Poland can be approximated with a Pareto distribution in its upper tail. This finding makes the formula for the optimal marginal tax rates of Saez [2001] applicable to the Polish case and allows us to provide estimates of the optimal marginal tax rates for Poland. We show that the current tax policy in Poland is not optimal. Specifically, we show, by relying on empirically viable estimates of the elasticity of the labour supply with respect to the wage, that the optimal marginal tax rate at high income levels exceeds 60%. In other words, we suggest that there is room for a welfare-improving reform in Poland, and we argue that high-income individuals should be expected to contribute substantially more at the margin than they currently do. |
| first_indexed | 2024-04-09T20:09:35Z |
| format | Article |
| id | doaj.art-3822ca013b84434f953a42ef393d3f99 |
| institution | Directory Open Access Journal |
| issn | 2300-5238 |
| language | English |
| last_indexed | 2024-04-09T20:09:35Z |
| publishDate | 2023-03-01 |
| publisher | Collegium of Economic Analysis, SGH Warsaw School of Economics |
| record_format | Article |
| series | Gospodarka Narodowa. The Polish Journal of Economics |
| spelling | doaj.art-3822ca013b84434f953a42ef393d3f992023-04-01T06:24:19ZengCollegium of Economic Analysis, SGH Warsaw School of EconomicsGospodarka Narodowa. The Polish Journal of Economics2300-52382023-03-013131416510.33119/GN/159031159031Optimal Labour Income Taxation in Poland: The Case of High-Income EarnersMaciej Dudek0https://orcid.org/0000-0002-8134-9794Paweł Dudek1https://orcid.org/0000-0002-7345-1959Konrad Walczyk2https://orcid.org/0000-0001-6886-2385University of Michigan, Ann Arbor, MI, United StatesSchools Complex in Bychawa, PolandSGH Warsaw School of Economics, PolandIn this paper, we use actual data provided by the Polish tax authority and characterise the properties of income distribution in Poland in the case of high-income earners. By employing a variety of techniques we are able to confirm that the distribution of income in Poland can be approximated with a Pareto distribution in its upper tail. This finding makes the formula for the optimal marginal tax rates of Saez [2001] applicable to the Polish case and allows us to provide estimates of the optimal marginal tax rates for Poland. We show that the current tax policy in Poland is not optimal. Specifically, we show, by relying on empirically viable estimates of the elasticity of the labour supply with respect to the wage, that the optimal marginal tax rate at high income levels exceeds 60%. In other words, we suggest that there is room for a welfare-improving reform in Poland, and we argue that high-income individuals should be expected to contribute substantially more at the margin than they currently do.https://gnpje.sgh.waw.pl/Optimal-Labour-Income-Taxation-in-Poland-The-Case-of-High-Income-Earners,159031,0,2.htmlsocial welfareeconomic efficiencypareto distributionoptimal taxation |
| spellingShingle | Maciej Dudek Paweł Dudek Konrad Walczyk Optimal Labour Income Taxation in Poland: The Case of High-Income Earners Gospodarka Narodowa. The Polish Journal of Economics social welfare economic efficiency pareto distribution optimal taxation |
| title | Optimal Labour Income Taxation in Poland: The Case of High-Income Earners |
| title_full | Optimal Labour Income Taxation in Poland: The Case of High-Income Earners |
| title_fullStr | Optimal Labour Income Taxation in Poland: The Case of High-Income Earners |
| title_full_unstemmed | Optimal Labour Income Taxation in Poland: The Case of High-Income Earners |
| title_short | Optimal Labour Income Taxation in Poland: The Case of High-Income Earners |
| title_sort | optimal labour income taxation in poland the case of high income earners |
| topic | social welfare economic efficiency pareto distribution optimal taxation |
| url | https://gnpje.sgh.waw.pl/Optimal-Labour-Income-Taxation-in-Poland-The-Case-of-High-Income-Earners,159031,0,2.html |
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