Abstract
We analyse distributional effects of several personal income taxation schemes being applied in the Czech Republic during last years. Personal income tax with progressive tax rate and non-taxable deductibles applied till 2005 allowed to tax jointly incomes of married couples with child.
PIT deductibles were replaced by tax credit in 2006 and progressive taxation has been replaced by flat rate since 2008. In our paper we first analyse ex post distributional impacts of PIT scheme changes by estimating Gini, Theil and Suits Indexes.
Then, we use a static micro-simulation model in order to predict ex ante income inequalities and tax progressivity for each concerned tax scheme. Due to the fact that estimation indexes parametrically require assuming a functional form for the underlying distribution which should mimic the variable distribution, we estimate the indexes non-parametrically by the trapezoid rule.
All simulations are based on SILC regularly carried out in around 4,000 Czech households.