Page 5 - IDEA Studie 14 Zdaneni vysokoprijmovych osob

Study 14 / 2015

Taxing top income earners in the Czech
Republic: An IDEA for reform

LIBOR DUŠEK, JIŘÍ ŠATAVA2

Summary

 The study brings new facts about the distribution of top incomes and the taxation
of top income earners in the Czech Republic, derives optimal marginal tax rates on the
top incomes, and proposes a specific systemic reform.

 The top one percent of the highest paid persons in the Czech Republic include those
employees and business owners whose gross incomes exceed CZK 1,230 million per
year.

 By international comparison, the Czech Republic exhibits low inequality of gross
incomes. The top 10% of the income distribution accounts for 25.7% of total income,
whereas in all developed countries for which comparable data is available this figure is
significantly higher, between 28.2% and 46.3%. When it comes to the top one percent
of the income distribution, the discrepancy compared with other developed countries
is less pronounced: The top one percent accounts for 6.8% of total income, while for
comparable countries it is between 5.4% and 19.7%.

 The top one percent of the highest paid taxpayers account for only 6.5% of all taxes
paid (income tax and insurance premiums), i.e. less than in proportion to their share

2 Libor Dušek is a researcher for IDEA, CERGE-EI, and Associate Professor of Economics, University of
Economics in Prague. Jiří Šatava is a researcher at the IDEA think tank and a doctoral student at CERGE-EI.
We thank the Czech Statistical Office, the Czech Ministry of Finance and the Trexima company for giving
access to data or analyses of these data.

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