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A proposal for a simple average-based progressive taxation system
Dirk-Hinnerk Fischer* 
Simona Ferraro*
Simona Ferraro
Affiliation: Tallinn University of Technology, Tallinn, Estonia
 0000-0001-5175-5348
Preliminary communication | Year: 2019 | Pages: 141 - 165 | Volume: 43 | Issue: 2 Received: January 9, 2019 | Accepted: April 1, 2019 | Published online: June 10, 2019
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
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21.43/1
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30/1.4
|
45/2.0998
|
|
Yo
|
76,809
|
76,809
|
76,809
|
|
Y1
|
165,850
|
165,850
|
165,850
|
|
T(Yo)
|
39,510
|
38,460
|
37,683
|
|
T(Y1)
|
90,002
|
86,395
|
83,602
|
|
ATR (Yo)
|
0.51
|
0.50
|
0.49
|
|
ATR(Y1)
|
0.54
|
0.52
|
0.50
|
|
ARP
|
0.02
|
0.02
|
0.01
|
Source: LIS 2007 Data for Germany Notes: authors’ own calculation
|
2007
|
Germany
|
|
Tax
rate
|
|
Quantile
|
Income
in thousand €
|
x
|
Formula
I
|
Formula
II
|
|
1
|
4.5
|
0.10
|
3.09
|
|
|
5
|
8.4
|
0.19
|
5.71
|
|
|
10
|
10.9
|
0.25
|
7.39
|
|
|
25
|
18.0
|
0.41
|
12.25
|
|
|
50
|
31.5
|
0.71
|
21.43
|
|
|
75
|
51.9
|
1.18
|
35.30
|
|
|
Cut
for (4)
|
73.5
|
1.67
|
50.00
|
|
|
90
|
76.8
|
1.74
|
52.27
|
50.10
|
|
95
|
99.0
|
2.25
|
67.37
|
50.58
|
|
99
|
165.9
|
3.76
|
112.87
|
52.10
|
Source: Luxembourg Income Survey (LIS) 2007 Notes: authors’ calculation based on LIS
|
2010
|
Germany
|
|
Tax
rate
|
|
Quantile
|
Income
in thousand €
|
x
|
Formula
I
|
Formula
II
|
|
1
|
4.3
|
0.1
|
2.9
|
|
|
5
|
8.8
|
0.2
|
5.89
|
|
|
10
|
11.3
|
0.25
|
7.6
|
|
|
25
|
18.0
|
0.40
|
12.17
|
|
|
50
|
31.9
|
0.71
|
21.43
|
|
|
75
|
54.1
|
1.21
|
36.42
|
|
|
Cut
for (4)
|
74.3
|
1.67
|
50
|
|
|
90
|
81.3
|
1.82
|
54.72
|
50.16
|
|
95
|
101.4
|
2.27
|
68.24
|
50.61
|
|
99
|
161.5
|
3.62
|
108.64
|
51.95
|
Source: Luxembourg Income Survey (LIS) 2007 Notes: authors’ calculation based on LIS
|
2007
|
Estonia
|
|
Tax
rate
|
|
Quantile
|
Income
in thousand €
|
x
|
Formula
I
|
Formula
II
|
|
1
|
0.7
|
0.05
|
1.60
|
|
|
5
|
2.4
|
0.18
|
5.51
|
|
|
10
|
2.7
|
0.22
|
6.45
|
|
|
25
|
4.6
|
0.35
|
10.71
|
|
|
50
|
9.2
|
0.71
|
21.43
|
|
|
75
|
16.3
|
1.26
|
37.87
|
|
|
Cut
for (4)
|
21.5
|
1.67
|
50.00
|
|
|
90
|
24.5
|
1.90
|
56.86
|
50.22
|
|
95
|
30.8
|
2.38
|
71.53
|
50.72
|
|
99
|
46.6
|
3.60
|
108.03
|
51.93
|
Source: Luxembourg Income Survey (LIS) 2007 Notes: authors’ calculation based on LIS
|
2010
|
Estonia
|
|
Tax
rate
|
|
Quantile
|
Income
in thousand €
|
x
|
Formula
I
|
Formula
II
|
|
1
|
0.7
|
0.06
|
1.79
|
|
|
5
|
2.4
|
0.19
|
5.68
|
|
|
10
|
3.4
|
0.27
|
8.02
|
|
|
25
|
4.6
|
0.37
|
11.09
|
|
|
50
|
8.9
|
0.71
|
21.43
|
|
|
75
|
16.9
|
1.34
|
40.32
|
|
|
Cut
for (4)
|
20.9
|
1.67
|
50.00
|
|
|
90
|
25.3
|
2.02
|
60.51
|
50.35
|
|
95
|
33.3
|
2.65
|
79.50
|
50.98
|
|
99
|
49.99
|
3.98
|
119.52
|
52.31
|
Source: Luxembourg Income Survey (LIS) 2007 Notes: authors’ calculation based on LIS
Source: DeStatis dataset (2015).
|
Income
group in thousand €
|
Average
income per group
in thousand €
|
Nr.
of taxpayers
in thousand
|
SPT
(1)
result
|
Tax
rate SPT
in %
|
Total
group tax volume real
in million €
|
Total
group tax volume under SPT
in million €
|
|
0-2.5
|
0.8
|
25.8
|
0.01
|
0.21
|
60.4
|
0.045
|
|
2.5-5.0
|
3.8
|
47.2
|
0.06
|
0.93
|
35.4
|
1.6
|
|
5.0-7.5
|
6.3
|
71.8
|
0.10
|
1.55
|
44.2
|
7.0
|
|
7.5-10
|
8.8
|
160.1
|
0.15
|
2.18
|
78.2
|
30.7
|
|
10.-12.5
|
11.3
|
665.1
|
0.19
|
2.78
|
204.4
|
208.6
|
|
12.5-15
|
13.7
|
863.7
|
0.23
|
3.39
|
495.2
|
402.6
|
|
15-20
|
17.5
|
1,789.2
|
0.29
|
4.32
|
2,220.2
|
1,352
|
|
20-25
|
22.5
|
2,134.1
|
0.37
|
5.56
|
4,013.5
|
2,667.3
|
|
25-30
|
27.5
|
2,333.1
|
0.45
|
6.79
|
6,093
|
4,355.6
|
|
30-37.5
|
33.6
|
3,148.9
|
0.55
|
8.30
|
11,898.9
|
8,783.9
|
|
37.5-50
|
43.3
|
3,737
|
0.71
|
10.69
|
21,890.6
|
17,291.6
|
|
50-75
|
60.6
|
3,818
|
0.99
|
14.97
|
38,271.8
|
34,625
|
|
75-100
|
85.7
|
1,531
|
1.41
|
21.17
|
26,260.2
|
27,776.1
|
|
100-125
|
110.9
|
657
|
1.83
|
27.39
|
16,703.8
|
19,952.9
|
|
125-175
|
145.1
|
486.2
|
2.39
|
35.86
|
18,583.7
|
25,306
|
|
175-250
|
205.5
|
230.3
|
3.38
|
50.05
|
14,160.7
|
23,677.8
|
|
250-375
|
299.3
|
114.4
|
4.93
|
51.60
|
11,147.5
|
17,668.1
|
|
375-500
|
428.8
|
38.7
|
7.06
|
53.73
|
5,685.9
|
8,923.9
|
|
500-1,000
|
668.2
|
37.7
|
11.01
|
55.00
|
8,977.1
|
13,870
|
|
1,000-2,500
|
1,463.4
|
12.2
|
24.11
|
55.00
|
6,339.8
|
9,829.8
|
|
2,500-5,000
|
3,408.8
|
2.6
|
56.16
|
55.00
|
2,924.7
|
4,788.4
|
|
5,000-
|
12,887.6
|
1.4
|
212.31
|
55.00
|
5,459.8
|
9,888
|
|
|
|
|
|
|
201,549.1
|
231,407
|
Sources: Based on DeStatis dataset (2015) Notes: authors’ own calculation, under the exclusion of donations; tax rate multiplier of 15 and a societal tax multiplier of 3.33 ̅ - in order to reflect a reasonably similar total tax volume.
|
Income group
in thousand €
|
Average income per group
in thousand €*
|
Nr. of taxpayers
in thousand
|
SPT Formula result**
|
Tax rate SPT**
|
Total group tax volume
real
in million € **
|
Total group tax volume
under SPT
in million €**
|
|
0-1.7
|
0.6
|
68.8
|
0.04
|
0.53
|
0
|
0.2
|
|
1.7-3.2
|
2.5
|
47.0
|
0.14
|
2.11
|
473.0
|
245.7
|
|
3,2.-6.4
|
4.7
|
128.0
|
0.26
|
3.96
|
1,289.2
|
2,364.3
|
|
6.4-12.8
|
9.3
|
176,925
|
0.53
|
7.90
|
1,782.2
|
12,967.2
|
|
12.8-19.2
|
15.5
|
79,832
|
0.88
|
13.17
|
804.3
|
16,269.1
|
|
19.2-25.6
|
21.9
|
31,954
|
1.24
|
18.64
|
322.2
|
13,055.3
|
|
25.6-32
|
28.4
|
14,092
|
1.61
|
24.13
|
141.7
|
9,647.8
|
|
32-63.9
|
41.7
|
15,556
|
2.36
|
35.44
|
156.5
|
22,960.5
|
|
63.9-127.8
|
82.4
|
2,359
|
4.67
|
53.00
|
23.9
|
10,298.2
|
|
127.8-191.7
|
151.7
|
282
|
8.61
|
55.00
|
2.8
|
2,353.,6
|
|
191.7- 255.7
|
222.3
|
61
|
12.61
|
55.00
|
0.569
|
745.9
|
|
255.7-320
|
286.5
|
30
|
16.25
|
55.00
|
0.569
|
472.7
|
|
320-383.5
|
350.5
|
22
|
19.88
|
55.00
|
1.6
|
424.1
|
|
383.5-639.1
|
480.8
|
31
|
27.27
|
55.00
|
0.569
|
819.7
|
|
639.1-3,195.6
|
952.6
|
21
|
54.03
|
55.00
|
4.200
|
1.100
|
|
Above 3,195.6
|
4,534.4
|
2
|
257.19
|
55.00
|
1.9
|
498.8
|
|
Total
|
|
|
|
|
569.2
|
48.8
|
Sources: Based on (Estonian Tax and Customs Board, 2013) * Estimation based on standard distribution ** Estimation – if applicable: based on the same parameters as Table 6
Source: Luxembourg Income Survey (LIS) for years 2007 and 2010
Source: Luxembourg Income Survey (LIS) for years 2007 and 2010
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June, 2019
II/2019 |
