Statutory, effective, and optimal net tax schedules in Lithuania

Abstract

We estimate effective and optimal net income tax schedules and compare them to the estimated statutory rates for the case of Lithuania for the period 2014–2015. Values of effective net tax rates are estimated from the survey of EU Statistics on Income and Living Conditions; the statutory net tax rates are estimated with the European tax-benefit simulator EUROMOD, whereas optimal net taxes are calculated via Saez (2002) methodology. We find that the three net tax schedules are similar for employees in the middle of the income distribution. At the bottom of the income distribution, optimal net tax schedules suggest higher in-work benefits. The net tax schedules diverge substantially for the self-employed. At the top of the income distribution, where the majority of self-employed are concentrated, the self-employed are required to pay 15 cents less net taxes per Euro than employees—and they effectively pay 29 cents less.

Impact of Changes in Personal Income Tax on Taxpayers Work Income

“…Tādēļ, valdībai ir svarīgi izveidot optimālu nodokļu sistēmu, lai nodrošinātu sociālo labklājību un veicinātu indivīdu strādāt (Palić et al, 2017), un samazinātu nabadzību un ekonomisko nedrošību (Abrams, 2017). Attiecībā uz darba ienākumu aplikšanu ar nodokli, pēc nodokļu literatūras, tiek uzskatīts, ka trīs faktori -ienākumu sadalījums, darbaspēka elastīgums un sabiedrības izvēle, nosaka, kam jāmaksā nodokļi un cik (Cerniauskas & Jousten, 2021). Saskaņā ar Vilsona (Wilson) teoriju, lai nodokļu sistēma būtu konkurētspējīga, tai jāspēj stimulēt vispārējās nodokļu bāzes dalībnieku skaita palielināšanu, izmantojot tiesību aktus.…”