AD ALTA JOURNAL OF INTERDISCIPLINARY RESEARCH
TAX AND LEVY BURDEN OF WAGES IN THE CZECH REPUBLIC
a
MICHAL KRAJŇÁK
VSB-Technical Uni e si y o Os a a, Facul y o Economics,
Depa men o Accoun ing and Taxes, Sokolská řída 33, 702 00
Os a a
email: a
Michal.k ajna[email p o ec ed]
This wo k was c ea ed in connec ion wi h scien i ic esea ch p ojec o he VSB-
Technical Uni e si y Os a a no. SGS 2022/1.
Abs ac : The a icle deals wi h e alua ing he in luence o he ax and le y bu den o
wages on employmen and ax e enue. The high ax and le y bu den on wages is no
a ou able o he economy. The analysis esul s show ha he inc ease in he ax and
le y bu den o wages has a nega i e e ec on employmen . When e alua ing he e ec
o he ax and le y bu den on ax e enue, he e ec is di e en om he scope o used
deduc ions. Howe e , he long- e m p oblem o he Czech Republic in compa ison
wi h o he coun ies is no he ax bu den on labou , bu he ela ed le y bu den, which
inc eases he p ice o labou and hus has a nega i e e ec on he labou ma ke om
i s ansna ional pe spec i e. The analysis con i ms ha he Czech Republic emains
among he coun ies wi h a high le y bu den. To achie e he pape 's objec i es,
me hods o desc ip ion, compa ison, analysis, syn hesis, and eg ession and co ela ion
analyses a e used. The added alue and uniqueness o his a icle is, among o he
hings, he ac ha hese indica o s – e ec i e, espec i ely, implici ax a es on
labou a e calcula ed depending on he dis ibu ion o wages.
Keywo ds: E ec i e Tax Ra e; Nominal Tax Ra e, Pe sonal Income Tax; Implici Tax
Ra e, Tax Re o m, Social Secu i y Con ibu ions, Wage.
1 In oduc ion
The a icle deals wi h analysing he ax and le y bu den o
income om dependen ac i i y in he Czech Republic in he
pe iod 2003-2020 in se e al a eas. Fi s o all, i analyses how
his ax and le y bu den a ec s employmen . The nex pa o
he esea ch analyses he impac o his ax and le y bu den on
he sha e o o al ax e enue o he Czech Republic. One o he
p oblems educing he compe i i eness o he Czech labou
ma ke is he high le y bu den (Teplická and Daubne , 2013).
Whe he and how his le y and ax bu den in he Czech Republic
de elops and changes in he men ioned pe iod is he cen al opic
o he las pa o his esea ch s udy.
The a icle's main objec i e is o analyse how e ec i e ax a e
and implici ax a e on labou a ec employmen and whe he
implici ax a e on labou a ec s he sha e o pe sonal income
ax o he o al ax e enue. Ano he goal is o e alua e he
de elopmen o e ec i e ax a es and implici ax a es on
labou and de e mine whe he he e is dependence be ween he
de elopmen o he alues o hese indica o s.
The ax bu den is ep esen ed by pe sonal income ax, he le y
bu den by social secu i y con ibu ions, including public heal h
insu ance and social secu i y p emiums, and he con ibu ion o
he s a e employmen policy.
The nominal income ax a e has been linea in he Czech
Republic since 2008. Howe e , i does no say much abou he
ac ual ax bu den, and i is mo e app op ia e o use he e ec i e
ax a e (he eina e ETR) o assess he ax bu den. The indica o
o he implici ax a e on labou (he eina e ITRL) is hen used
o exp ess he o al ax and le y bu den o labou . Despi e one
nominal a e o social secu i y con ibu ions (he eina e SSC),
and since 2008 also o pe sonal income ax, he ax bu den is
no he same o all axpaye s. The esea ch ques ion o his
a icle is whe he his bu den a ec s employmen and he sha e
o pe sonal income ax om dependen ac i i y o he o al ax
e enue in he Czech Republic. The men ioned ITRL and ETR
indica o s a e used o analyse his esea ch ques ion. The
uniqueness and added alue o his a icle a e ha hese a es
(ETR and ITRL
The a icle's in oduc ion is ollowed by an ou line o he
heo e ical backg ound wi h a ocus on he pe sonal income ax.
The ollowing sec ion is ocused on he cha ac e is ics o he
me hods ( eg ession and co ela ion analysis) and inpu da a
used. A linea eg ession model is used o analyse selec ed
dependences. Fu he , he analysis is he main pa o he ex .
The las pa o he pape summa ises he a icle's esul s and
desc ibes he limi s o he analysis.
) a e calcula ed acco ding o he dis ibu ion o
wages in he Czech Republic as weigh ed a e ages. Ano he
uniqueness o his ex is he scope o he esea ch pe iod o 18
yea s, as s udies analysing hese ac o s in he condi ions o he
Czech Republic in ela ion o he dis ibu ion o wages and such
a long pe iod ha e no ye been conduc ed.
2 Li e a u e e iew
The ax and le y bu den o wages is he subjec o esea ch in
he Czech Republic and ab oad. One o he ac o s in luencing
he ax and le y bu den on labou is he le el o employmen .
Acco ding o Dalenbe g and Pa idge (1995) he high ax
bu den on labou nega i ely in luences employmen . Simila
indings ha a high ax bu den does no posi i ely in luence
employmen we e ound by Ma k e al., (2000); Kosi and Bojnec
(2006). ITRL
o ETR a e widely used o exp ess he ax bu den
on labou . Mo e abou hese indica o s, e.g. Mankiw e al.,
(2009); Glday and Madl (2018).
G ace (2018) s a es ha he p obabili y ha a company will
employ labou is 1.18 pe cen highe when cu en ax a es
inc ease by one pe cen age poin . O he s udies (Cu le e al.,
2018; Bu da and Wede , 2016) s a e ha pe sonal income ax on
employmen canno be de e mined unambiguously and depends
on he sensi i i y o he income ax a e. Fo his eason,
employmen may ise despi e ising ax a es.
The e is a end owa ds highe SSC and lowe ax a es on
pe sonal income (Michaelis and Bi k, 2006). In addi ion o
pe sonal income ax, paymen s o SSC a e a signi ican ac o
in luencing he amoun o pe sonnel cos s (Teppe e o á, 2019;
P amme , 2019; Goudswaa d and Caminada, 2015). The s udy
Baue and Riphahn (2002) analysing pay oll and employmen
axes in Ge many, s a es ha he employmen a e is no
nega i ely a ec ed by he pe sonal income ax bu by SSC.
Acco ding o he esul s o B onchi and Bu ns (2001), he ax
sys em o he Czech Republic is ecommended by lowe ing SSC
and inc easing he eliance sys em on he pe sonal income- ax
sys em. Adam e al. (2019) men ion ha educing he le y
bu den will posi i ely a ec employmen . High pe sonnel cos s
educe he pe o mance and compe i i eness o companies. Mo e
abou he pe o mance o companies Knápko á e al., (2014);
Belas e al., (2020).
The amoun o he ax bu den a ec s employmen and he s a e´s
o al ax e enue. In he Czech Republic, pe sonal income ax
has signi ican ly sha ed he s a e's o al ax e enues,
app oxima ely 20% o he o al ax e enue. Th oughou he
exis ence o income ax, he e has been no signi ican ola ili y
in his sha e, as in he USA (Ga e , 2009). Ano he impo an
di ec income ax is also co po a e income ax (Konečná and
And ejo ská, 2020; Mo a ec e al., 2019).
On he con a y, Che nick and Reime s (2019) claim ha
indi ec axes show a mo e s able sha e o ax e enue han di ec
axes. Acco ding o Yilmazkuday (2017), he non-
ecommenda ion o inc ease income ax bu den om dependen
ac i i ies also ollows. Ra he , i is ecommended o inc ease
indi ec o p ope y axes. Mo e abou p ope y axes e.g. Ši oký
e al., (2015). Tax e enue is signi ican ly a ec ed by he
cons uc ional elemen s o axes, so each ax e o m changes he
sha e o ax o he o al ax e enue and he o al amoun o ax
e enue (Mahda i, 2008; Sanz-Sanz, 2016). The La e cu e
de ines he heo e ical ela ionship be ween ax a es and ax
e enues. Acco ding o Lin and Jia (2019) in China, i is
ecommended o se he ax a e a 35% o maximize ax
e enue. In de e mining he ax bu den, he ax a e should be
aken in o accoun and he amoun o he axpaye s' income o
social s a us (Jo daan and Schoeman, 2015).
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AD ALTA JOURNAL OF INTERDISCIPLINARY RESEARCH
While he pe sonal income ax bu den is gene ally lowe o
amilies wi h child en, manda o y paymen s on he SSC o en do
no ake hese ac o s du ing calcula ing hese paymen s
(Al a ez-Ma inez and Polo, 2014). The al eady men ioned
p oblem o he Czech Republic is he pe sis en ly high le y
bu den o labou (K ame e al., 2016; Lyko á, 2015).
The o e iew o s udies shows ha s udies e alua ing he impac
o ETR, esp. ITRL on employmen , esp. ax e enue, as well as
he analysis be ween he de elopmen o ETR and ITRL
ha e
no ye been pe o med unde he condi ions o he Czech
Republic. This demons a es he ce ain uniqueness and added
alue o his a icle.
3 Me hodology
A linea eg ession unc ion gene ally de e mined (1) is used o
model he dependence o he sha e o pe sonal income ax om
dependen ac i i y o he o al ax e enue acco ding o he alue
o e ec i e and implici ax a es (1),
𝑌= 𝛽0+𝛽1𝑋1+𝛽2𝑋2+𝛽3𝑋3+𝛽4𝑋4+ 𝛽5𝑋5+ 𝛽6𝑋6+𝜀, (1)
whe e Y is he dependen a iable exp essing he sha e o ax
e enue o he pe sonal income ax om a dependen ac i i y o
he o al ax e enue o he Czech Republic, he alues X1 o X6
a e he a e age alues o he indica o ITRL, esp. ETR
calcula ed as a weigh ed a e age acco ding o he empi ical
dis ibu ion o wages in he ele an yea . Speci ically, X1
exp esses he ITRL o he case whe e only he deduc ion pe
axpaye is applied, X2 he si ua ion whe e, in addi ion o he
deduc ion pe axpaye and he deduc ion pe child a e also used
o educe he ax liabili y, X3 when he deduc ion pe axpaye
and deduc ion o wo child en a e used. The s uc u e o
indica o s o ETR is simila , speci ically X4 exp esses ETR i
only he deduc ion pe axpaye is applied, X5 cases whe e he
deduc ion o axpaye and o one child and X6 when he
deduc ion o axpaye and o wo child en a e used. ETR is
gene ally de e mined by (2), ITRL
acco ding o (3),
𝐸𝑇𝑅 = 𝑇
𝑌, (2)
𝐼𝑇𝑅𝐿= 𝑇+ 𝑆𝑆𝐶𝐸+𝑆𝑆𝐶𝐼
𝑌+ 𝑆𝑆𝐶𝐸, (3)
whe e T is he ax liabili y, Y he axpaye 's income, SSCE is he
social secu i y con ibu ions paid by he employe , SSCI
is he
social secu i y con ibu ions paid by he employee.
Acco ding o da a om income ax e u ns by indi iduals a e
deduc ions pe axpaye and child en he mos used deduc ions,
speci ically o he yea 2020 he elie o he axpaye was
applied in 99% o ax e u ns, a ax c edi o child en in
app oxima ely 30% o ax e u ns (Financial Adminis a ion,
2022a). Compa ed o o he ax deduc ions, hese wo a e used by
axpaye s o ax op imiza ion he mos o en. A limi ing aspec
o his model may be he ac ha non- axable pa s o he ax
base a e no aken in o analyses, which do no a ec SSC, bu
in luence he ax base and he axpaye 's ax liabili y. Tax
s a is ics o he Minis y o Finance o he Czech Republic
(Financial Adminis a ion, 2022b) show ha he mos used non-
axable pa s o he ax base o 2020 we e deduc ions o p i a e
li e insu ance and amoun o ade union con ibu ions
(app oxima ely 20% o ax e u ns). Howe e , no in o ma ion is
a ailable on he a e age applied alues o hese non- axable
pa s. Fo his eason, i is abs ac ed om non- axable pa s o
he ax base. On he con a y, he uniqueness and added alue o
he s udy is he ac ha e ec i e, esp. implici ax a es in he
eg ession model a e calcula ed as weigh ed alues acco ding o
he pe cen age o employees in he bands o g oss wages.
In addi ion o he analysis o ac o s in luencing he sha e o
pe sonal income ax o he o al ax e enue ano he such
indica o is he mo i a ion o wo k, which is exp essed by he
employmen a e (Rick e al., 2018). Acco ding o Reiss and
Schus e (2020), his indica o signi ican ly a ec s ITRL
𝑌= 𝛽0+𝛽1𝑋1+𝛽2𝑋2+𝛽3𝑋3+𝜀, (4)
. Based
on he abo e, ela ion (4) is o mula ed,
whe e Y is he employmen a e, X1 o X3 exp ess he a e age
alues o he ITRL (X1 o he case i he deduc ion o only he
axpaye is applied, X2 pe axpaye and one child, X3
pe
axpaye and wo child en).
As ollows om he pa dealing wi h he heo e ical
backg ound, one o he ac o s weakening he compe i i eness o
he Czech ax sys em isn´ he high ax bu he le y bu den.
Reg ession lines will be cons uc ed o examine whe he he
sp ead be ween he ax and le y bu den dec eases o inc eases.
The angle be ween he eg ession lines is o med by wo
selec ion linea eg ession lines exp essing he dependence
be ween he cha ac e s y1 and y2 (Ma ill, 2004). Y1 is a a iable
exp essing he ax bu den on wages (ETR), y2 is a a iable
exp essing he ax and le y bu den on wages (ITRL
). The angle
𝑐𝑜𝑡𝑔 𝜑 is o med acco ding o Toka e al., (2019) by (5),
𝑐𝑜𝑡𝑔 𝜑= �𝑟𝑥𝑦�
1−𝑟𝑥𝑦
2�𝑠𝑦
𝑠𝑥+𝑠𝑥
𝑠𝑦� , (5)
whe e xy is he co ela ion coe icien , 2xy is he coe icien o
de e mina ion, sx is he a iance o he alues o he cha ac e x,
sy
he a iance o he alues o he cha ac e y.
Acco ding o he aim o he pape , he ollowing esea ch
hypo heses we e o mula ed:
 as he ax bu den inc eases, he ax e enue inc eases,
 he ax and le y bu den o labou nega i ely a ec s
employmen ,
 he di e ence be ween he ax and le y bu den o wo k
doesn´ change in he Czech Republic.
Fo analysis o he in e dependencies be ween he selec ed
indica o s, he ollowing esou ces ha e been applied:
 ax e enue o he pe sonal income ax om a dependen
ac i i y in he Czech Republic om 2003 o 2020 we e
sou ced om Financial Adminis a ion (Financial
Adminis a ion, 2022c),
 employmen a e and sha es o employees in he bands o
g oss mon hly wages we e sou ced om he Czech
S a is ical O ice (Czech S a is ical O ice, 2022a and
Czech S a is ical O ice, 2022b),
 o calcula ion o ETR and ITRL Ac . No. 586/1992 Coll.
on Income Taxes, Ac . No. 48/1997 Coll. on Public Heal h
Insu ance and Ac. No. 589/1992 Coll. on P emiums o
Social Secu i y and Con ibu ion o he S a e Policy o
Employmen .
Abou he a ailabili y o da a, he pe iod 2003–2020 is analysed.
The yea 2020 is he las yea o which da a a e a ailable. The
sha es o employees in he g oss wage bands ha e been
published in he da abase o he Na ional S a is ical O ice
(Czech S a is ical O ice, 2022a) since 2003.
4 Resul s
Be o e he analysis o he dependence o he employmen a e,
esp. he sha e o pe sonal income ax o he o al ax e enue in
ela ion wi h e ec i e o implici ax a es, he basic
cha ac e is ics o each a iable a e pe o med using he ools o
desc ip i e s a is ics.
4.1 Cha ac e is ic o inpu da a
The weigh ed a e age e ec i e, esp. implici ax a es a e
g aphically cap u ed as one o he analysis's inpu da a in Figu es
1a and 1b. These alues a e calcula ed acco ding o he
dis ibu ion o wages in he Czech Republic in he pe iod 2003-
2020 o each analysed yea in cases whe e only he basic
deduc ion pe axpaye (ETR0, ITRL0), deduc ion pe axpaye
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AD ALTA JOURNAL OF INTERDISCIPLINARY RESEARCH
and one child (ETR1 and ITRL1) and deduc ion pe axpaye and
wo child en (ETR2, ITRL2
) a e applied.
Figu e 1a. E ec i e Tax Ra e (in %)
Sou ce: own esea ch
Figu e 1b. Implici Tax Ra e on Labou (in %)
Sou ce: own esea ch
In addi ion o he weigh ed a e age o ETR and ITRL
, he inpu
da abase o he analysis is also o med by he alues o he
employmen a e in he Czech Republic (EMP) and he sha e o
pe sonal income ax om he dependen ac i i y o he o al ax
e enue (TR). Fo each a iable, he minimum and maximum
alues, he mean and he median a e indica ed in Table 1.
Tab. 1: O e iew o he Da a Used in he Reg ession
Analysis
Va iable
Minimum
Maximum
Mean
Median
Y - TR
18.98
24.08
21.45
21.27
Y - EMP
64.23
76.90
68.62
66.56
X1 - ITR
41.12
L0
44.20
42.59
42.80
X
2
- ITR
37,62
L1
42,33
39.63
39.49
X3 - ITR
33.69
L2
40.76
36.35
35.43
X4 - ETR
10.09
0
13.29
11.39
11.17
X
5
- ETR
5.12
1
9.64
7.39
7.20
X
6
- ETR
-0.14
2
7.52
2.98
2.47
Sou ce: own esea ch
4.2 Co ela ion analysis
As ollows om he de elopmen o ETR and ITRL, he ax
bu den does no ollow he same end and di e s acco ding o
he applied deduc ions. In gene al, i can be said ha axpaye s
wi hou he applica ion o he deduc ions han o axpaye
inc ease he ax bu den on labou , he opposi e end can be
obse ed o axpaye s wi h child en. In some cases, he ETR is
e en in nega i e alues. The sha e o pe sonal income ax o he
o al ax e enue is no wholly cons an i clea ly does no show
an inc easing o dec easing end. Is he change in he sha e o
ax e enue ela ed o he de elopmen o ETR o ITRL
alues?
Does he le el o employmen a ec he ax bu den on labou ?
Does SSC in he Czech Republic signi ican ly inc ease he ax
bu den on labou ? The ollowing analysis a emp s o answe
hese ques ions.
Tab. 2: Co ela ion Analysis. Sou ce: own esea ch
TR
EMP
ITR
ITR
L0
ITR
L1
ETR
L2
ETR
0
ETR
1
2
TR
1
EMP
-0.034
1.000
ITRL
0.559
0
-0.170
1.000
ITRL
0.546
1
-0.335
0.970
1.000
ITRL
0.470
2
-0.524
0.889
0.970
1.000
ETR
0.759
0
0.425
0.713
0.571
0.380
1.000
ETR
0.737
1
-0.154
0.952
0.945
0.864
0.778
1.000
ETR
0.583
2
-0.491
0.894
0.970
0.988
0.466
0.911
1
Sou ce: own esea ch
-2
0
2
4
6
8
10
12
14
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
ETR in %
Yea
ETR0
ETR1
ETR2
0
5
10
15
20
25
30
35
40
45
50
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
ITRL in %
Yea
ITRL0
ITRL1
ITRL2
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Table 2 p esen s he esul s o he co ela ion analysis.
Acco ding o he esul s, a s a is ically signi ican posi i e
co ela ion was indica ed be ween ITRL2 and ITRL1, be ween
ETR1 and ETR2, be ween ITRL2 and ETR2 o be ween ITRL1
and ETR2. In gene al, he dependence be ween ITRL and ETR is
posi i e. I he ax bu den inc eases o one g oup o axpaye s,
he ax bu den usually inc eases o he o he s. Howe e , some
mode a ely posi i e co ela ions, such as be ween ETR0 and
ETR2, sugges ha his ax bu den may no inc ease equally. In
his case, he eason is he al eady men ioned inc ease in he
amoun o ax c edi s o child en. A nega i e co ela ion was
ound only be ween he employmen a e indica o and he ITRL
o ETR indica o s. A mo e de ailed e alua ion o he e ec i e
ax a e, esp. he implici ax a es on ax e enue (Model A) o
he employmen a e (Model B) a e p o ided in he eg ession
analysis in Table 3.
4.3 Reg ession analysis
The esul s o Table 3 show ha bo h models ha e a high
de e mina ion index R2. In he case o model A and B his means
ha mo e han 95% o he a iance is due o he cha ac e XN
and less han 5% due o andom de ia ions. The e a e also no
au oco ela ion acco ding o he esul s o he Du bin-Wa son
es (mo e abou he Du bin-Wa son es Ali, 1987; Tu ne ,
2019). Acco ding o he ou comes o he F- es , bo h eg ession
models a e s a is ically signi ican a 5% le el o signi icance.
This le el o signi icance is ecommended acco ding o
Yalcinkaya e al., (2017).
Tab. 3: Reg ession Analysis
Model A Model B
Va iable
X
1
, X
2
, X
3
, X
4
, X
5
,
X
X
6
1, X2, X3
Signi . Coe icien Signi . Coe icien
X1 - ITR 0.017
L0 -4.713 0.689 -0.876
X2 - ITR 0.096
L1 2.865 0.008 7.396
X3 - ITR X
L2 X 0.000 -5.016
X4 - ETR 0.006
0 3.841 - -
X5 - ETR 0.076
1 -2.125 - -
X6 - ETR 0.035
2 0.649 - -
Cons an 0.000 78.582 0.009 -5.379
Obse a ion 18 18
R0.957
2 0.952
Signi . F 0.000 0.000
DW 2.304 2.144
In he case o model A, which is gene ally o malized by (1), he
eg ession coe icien X2 and X5 a e s a is ically insigni ican .
The same si ua ion is wi h eg ession coe icien X3
, which is
excluded om he model. A e emo ing insigni icance
a iables, model A has a o m (6),
Y = -4.713 X1 + 3.481 X4 + 0.649 X6
+ 78.582 (6)
The nega i e pa ame e X1 o he model in equa ion (6) shows
ha he employmen a e would inc ease i he labou ax bu den
dec eased. On he con a y, he posi i e pa ame e s
o X4 and X6
, which exp ess ETR, mean ha e en wi h he
g ow h o he ax bu den, an inc ease in he employmen a e can
be expec ed.
The ex en o which he ax bu den on labou a ec s he sha e o
pe sonal income ax om dependen ac i i y o he o al ax
e enue is modelled in Model B in Table 3. Fo Model B, he
explana o y a iable X1
is insigni ican . The inal o m o he
model is shown by (7).
Y = 7.396 X2 – 5.016 X3
– 5.379 (7)
This equa ion illus a es ha wi h a highe ax bu den
ep esen ed by ITRL2 i is possible ha he pe sonal income ax
om dependen ac i i ies also has a highe sha e o ax e enue.
Howe e , as he ax bu den on axpaye s dec eases wi h
applying he deduc ion o child en, pa ame e X3
is nega i e.
Using he angle be ween he eg ession linea lines, gene ally
de e mined (5), he dependence be ween he de elopmen o
ETR and ITRL om 2003 o 2020 is examined in cases whe e
he employee applies a deduc ion pe axpaye (Figu e 2a), pe
axpaye and one child (Figu e 2b) and axpaye and wo
child en (Figu e 2c). As in he p e ious analysis, his s udy's
uniqueness and added alue a e ha he ETR and ITRL
a e
weigh ed a e ages calcula ed o he wage dis ibu ion. The
alue o he co g φ angle enclosing he linea eg ession lines is
shown in Table 4.
Figu e 2a. Si ua ion S
0
Sou ce: own esea ch
Figu e 2b. Si ua ion S
1
Sou ce: own esea ch
Figu e 2c. Si ua ion S
2
Sou ce: own esea ch
0
10
20
30
40
50
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
ETR, ITRL in %
Yea
ETR0
ITRL0
0
10
20
30
40
50
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
ETR, ITRL in %
Yea
ETR1
ITRL1
-5
0
5
10
15
20
25
30
35
40
45
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
ETR, ITRL in %
Yea
ETR2
ITRL2
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AD ALTA JOURNAL OF INTERDISCIPLINARY RESEARCH
Tab. 4: Angle o Linea Reg ession Lines
Si ua ion
Co g
S
co g φ0= 0.712
1−0.507 ∙�0.87
1.05 +1.05
0.87�
= 18° 79´
0
S
co g φ1= 0.945
1−0.893 ∙�1.60
1.75 +1.75
1.60�
= 3° 22´
1
S
co g φ2= 0.988
1−0.976 ∙�2.70
2.66 +2.66
2.70�
= 0° 69´
2
5 Discussion
Figu e 1 shows ha he ax bu den dec eases wi h inc easing
deduc ions. Compa ed o he i s analysed yea (2003), he ETR
dec eased in cases whe e he deduc ion o child en is applied
due o he equen alo isa ion o he alues o his ax c edi .
On he con a y, he axpaye 's elie has no been inc eased, and
so wi h he g adual inc ease in wages in he na ional economy,
he ax bu den is also g owing. The end o a g adual inc ease in
he ax bu den on labou since 2009 is also con i med by he
ITRL
. The esul s o Michaelis and Bi k (2006) con i m ha
compulso y SSC in luences he mos signi ican ax bu den on
labou . This end con inues al hough he a e o SSC paid by he
employee has dec eased om 8% o he assessmen base since
2009 o 6.5%, he a e o SSC paid by he employe om 26% o
25% since 2009, esp. o 24.8% om 1 July 2019.
Based on he esul s, i can be concluded ha labou axa ion
impac s he employmen a e. Howe e , when analysing he
e ec s and possible changes in he educ ion o inc ease o he
ax bu den, i is also necessa y o conside he declining s abili y
o he legal en i onmen , which a ec s bo h supply and demand
o labou (Ko lán e al., 2019). Compa ed o labou ma ke s in
No h Ame ica, hese changes a e less lexible (Nickell, 1997).
The esul s also pa ially con i m he main indings o he s udy
Kosi and Bojnec (2006), Goudswaa d and Caminada (2015) o
Teppe o á (2019), which s a es ha labou axa ion has a
nega i e impac on employmen as a high ax bu den inc eases
labou cos s.
Resul s Figu e 2 con i ms Mahda i (2008) ha ax e o m can
signi ican ly change he ax bu den and hus he sha e on ax
e enues. In all analysed cases, he ax bu den dec eased
be ween 2007 and 2008.
The esul s o model (6) con i m he conclusions o Hájek
(2003). One o he ways o achie e a lowe ax bu den on labou
is o ans e he ax bu den om di ec axes o indi ec axes,
which was pa ially done du ing he e o m o public inances in
he Czech Republic be ween 2007 and 2008. Mo e abou he
analysis o selec ed indi ec axes e.g. K zikallo á and S řílko á,
(2016); Da id (2019).
Nega i e pa ame e X3
in ela ion (7) ollows ha i he s a e
goal is o inc ease he sha e o pe sonal income ax om he
dependen ac i i y o he ax e enue, his inc ease can be
achie ed mainly h ough axpaye s who apply a deduc ion o
one child o do no apply he deduc ion a all. O he wise, i is
mo e ad an ageous o ecommend a change in he s uc u al
elemen s o he ax - o example, adjus men s o he amoun s o
deduc ions o child en o changes in he me hod o ax base
cons uc ion. These changes subsequen ly a ec ax
p og essi i y, as Koskela and Schob (2009) s a ed. Ano he
p oblem wi h changes in pe sonal income axa ion is long- un
elas ici ies o wage ax (Ha ánek e al., 2016).
In addi ion o pe sonal income ax, ITRL also includes SSC paid
by he employe and he employee. In he Czech Republic, he
SSC paid by he employe en e s he ax base and, acco ding o
P amme (2019), inc eases pe sonnel cos s. This ac o
in luences he sha e o pe sonal income ax o he o al ax
e enue. Despi e he nominal educ ion in selec ed SSC a es, as
shown by he ITRL
in Figu e 1, SSC ep esen s he highes
componen o he ax and le y bu den o wages.
The close he alue o co g φ is o ze o, he highe dependence
be ween he pai s o analysed alues. In si ua ion S0, whe e only
he deduc ion o a axpaye is applied, he deg ee o dependence
be ween ETR and ITRL is he lowes . ITRL anges om 40 o
45%. I he high le y bu den inc eased, he di e ence be ween
he ETR and ITRL
alues would dec ease, which is no he case
he e. Fo his eason, he esul s o he B onchi and Bu ns (2001)
s udy on he high dispa i y be ween he ax and le y bu den o
labou a e also con i med. The e o e, a high le y bu den on
labou emains a p oblem. A sligh dec ease in he ax bu den
occu ed only du ing 2005 and 2006 when he non- axable pa
o he ax base was eplaced by elie , and be ween 2007 and
2008, when he nominal p og essi e ax a e changed o a linea
a e. The le y bu den on wages dec eased only be ween 2008
and 2009 wi h a dec ease in he a e o social secu i y p emiums
and con ibu ions o he s a e employmen policy paid by bo h
he employee and he employe . In his case, he e a e pa ial
iden ical conclusions o Adam e al. (2019) ha educing SSC
has posi i e e ec s on labou cos s. The a e o SSC was also
changed du ing he yea 2019, bu due o posi i e economic
g ow h and ising wages in he economy, his did no educe he
p ice o labou . This high le y bu den can hen lead employe s
o shi he bu den o compliance wi h SSC back o employees in
lowe wages (Nielsen and Smy h, 2008).
A highe dependence be ween ETR and ITRL exis s when, in
addi ion o he deduc ion pe axpaye , he deduc ion o child en
is also applied. This leads o a dec ease in ETR alues, leading
o a educ ion in ITRL. E en in his case, he SSC is no longe
g aded acco ding o, o example, he numbe o child en
suppo ed by he axpaye , which could be a c i e ion o
de e mining he amoun o a e o SSC (Al a ez-Ma inez and
Polo, 2014). The main ac o educing he ax bu den on labou ,
especially in he middle o he analysed pe iod, was he inc ease
in ax c edi s o child en, esp. eplacemen o non- axable pa s
o he ax base by a ax ad an age. As in he si ua ion o S0
, he
a e age labou cos s and he a e age e ec i e ax a e ha e
inc eased in ecen yea s. Employe s bea wage cos s and ela ed
SSC in hei cos s (Tachibanaki and Yokoyama, 2008).
6 Conclusion
The a icle aimed o e alua e whe he ETR esp. ITRL a ec s
employmen and whe he ITRL a ec s he sha e o pe sonal
income ax om he dependen ac i i y o he o al ax e enue.
Ano he goal was o e alua e he de elopmen o ETR and ITRL
a es. The analysis was pe o med unde he condi ions o he
alid legisla ion o he Czech Republic in he pe iod 2003–2020.
The pe iod o analysis is limi ed by he a ailabili y o da a on
he dis ibu ion o wages based on which he weigh ed a e age
ETR and ITRL
we e calcula ed. The analysis o dependencies
wi h weigh ed a e ages o hese alues is one o he added
alues o his s udy.
The ETR and ITRL
a es we e calcula ed o he h ee mos
equen si ua ions ha a ise in he Czech Republic o he
axa ion o income om dependen ac i i ies, i.e. he axpaye
applies he deduc ion only o himsel , o he axpaye and one
child o he axpaye and wo child en. The analysis was
abs ac ed om he use o non- axable pa s o ax bases, which
may be a limi ing ac o in his s udy.
The main esul s o his s udy include he inding ha he ax and
le y bu den on wages has a nega i e impac on employmen . I
he connec ion o employmen only wi h he e ec i e ax a e
we e analysed, he pa ial opposi e e ec was ound. The
analysis examining he dependence be ween he sha e o
pe sonal income ax om he dependen ac i i y o he ax
e enue o ITRL shows ha o e alua e he impac o he sha e
o ax e enue, i is necessa y o analyse whe he and how many
deduc ions a e used he axpaye o educe ax liabili y.
Especially in ax le ies in connec ion wi h pe sonal income ax,
he ax bu den is in some cases ze o, esp. nega i e. This is
con i med by he analysis esul s examining whe he he le y
and ax bu den on labou is dec easing. This highes ax bu den
dec ease occu ed in connec ion wi h he e o m o public
inances in 2008. Howe e , he sha e o SSC o he o al ax and
le y bu den changes only minimally and hus, he high le y
bu den o income om dependen ac i i y emains a p oblem.
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AD ALTA JOURNAL OF INTERDISCIPLINARY RESEARCH
This s udy has some limi a ions. Fi s o all, is he ac ha
esea ch was done unde he condi ion o he Czech Republic.
The analysis esul s can´ be gene alized o all Eu opean o
wo ld coun ies. The second limi a ion is da a a ailabili y,
especially wage dis ibu ion om he yea 2003. This is he
eason why analysis s a ed his yea . Finally, he hi d limi a ion
is ha ax bu den calcula ion is abs ac ed om non- axable
pa s.
The opic o u he esea ch in his a ea may be compa ing
hese esul s wi h a simila analysis in ano he coun y,
ex ending he pe iod's leng h acco ding o he a ailabili y o
da a, o conside ing changes in income axa ion om dependen
ac i i y in u u e yea s.
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