Page 5 - IDEA Studie 18 2016 Danovy system a motivace matek k praci

Study 18 / 2016
The Tax System Reduces Motivation to Return to Work among Mothers with Young Children: Recommendations and Evaluation2
DECEMBER 2016
Jiří Šatava
Summary
 In the Czech Republic, the overall taxation of work, i.e individuals' income tax together with social security and health insurance contributions, places a heavy burden even on the relatively low earnings of so-called second earners in households, i.e. partners with lower earnings. These peoples' work activity is, however, generally very sensitive to the level of taxation. A large group of these earners is made up of mothers with young children.
 Mothers who are the second earner in their household are subject to a participation tax rate (PTR) up to 30 % higher than their partners, and yet a higher PTR results in lower motivation to work. Women with children and low earning potential are subjected to the highest PTRs in comparison with their partners.
 The current system of taxing work thus contributes, together with the conditions for paid parental leave and low availability of nurseries and pre-schools, to Czech mothers with young children having the highest employment drop-out rate in the whole of the EU. The share of Czech mothers with children under six years of age who are in work is thus the second lowest in the EU and almost half the equivalent share in the Netherlands. That is despite the fact that the level of economic activity
2 This study was made possible thanks to support from the Czech Academy of Sciences within its AV21 Strategy. The author wishes to thank Daniel Münich, Klára Kalíšková, Filip Pertold and readers Jaromír Kalmus and Robert Jahoda for their valuable comments on the working version. Any errors, omissions or ambiguities are the author's responsibility.
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