1. Taxes - how to measure and compare it?

2. Taxes Value-Added Tax: Income Tax: Property Tax:
A national sales tax collected at each stage of production or consumption of a good.
Income Tax:
An annual charge levied on income
Property Tax:
Taxes paid on homes, land or commercial real estate.

3. Taxes by economic function I.
Assumption that each tax may be attributed to a single economic function.
There are cases where a tax is related to multiple economic functions and needs to be broken down to a single economic function.

4. Taxes by economic function II.
Taxes on consumption include taxes on transactions between producers and final consumers (mainly VAT and excise duties).
Taxes on labour are divided among employed and unemployed labour.
Employed labour: mainly personal income tax and compulsory social security contributions.
Unemployed labour: part of personal income tax and compulsory social security contributions of self and non-employed are the main components.
Taxes on capital include capital and business income taxes, and taxes on stocks of capital.
Capital and business income: mainly corporate income tax, personal income tax and social security contributions by self-employed persons.
Taxes on stocks of capital: mainly taxes on land, buildings and other structures and taxes on business and professional licenses.

5. Macroeconomic point of view I.
progressivity of the average rate(ratio of the change in average rate to the change in income)
PAR = (T1/Y1 – T0/Y0) / (Y1 – Y0)
progressivity of the tax liability (elasticity of the tax due to pre-tax income)
PTO = [(T1 – T0)/T0] / [(Y1 – Y0)/Y0]
progressivity of the income after taxes(elasticity of the income after taxes due to pre-tax income)
PEAT = {[(Y1 – T1) – (Y0 – T0)] / (Y0 – T0)} / [(Y1 – Y0)/Y0]
T … tax after credits, Y … gross wage
Measurement of tax progressivity is important for a complex evaluation of the impacts of changes in tax legislation or for an identification of tax brackets with the highest tax progressivity.

6. Macroeconomic point of view II.
Interpretation of indicators of interval progressivity
Nature of the tax
PAR
PTO
PEAT
proportional 1
progressive
>0
>1
<1
regressive
<0

7. Measurement of tax burden
Tax quota
Implicit tax rate on labour
Effective tax rate

8. Tax Quota (Total Taxes to GDP)
not very telling indicator because of differences in methodology used in EU states
calculate the average of tax quota (also as a weighted average)
= total tax revenue / GDP x 100 (in %)

9. Tax Quota - example the Czech Republic 2013 2014 2015 2016
Total receipts from taxes and social contributions (mil. EUR)
54 970,7
53 094,9
57 393,7
61 387,5
GDP (mil. EUR) ,8 ,1 ,9
Finland
2013
2014
2015
2016
Total receipts from taxes and social contributions (mil. EUR)
88 958,0
90 304,0
92 377,0
95 462,0
GDP (mil. EUR) ,2 ,9 ,7 ,8
Results
2013
2014
2015
2016
Tax Quota – the Czech Republic
0,348
0,339
0,341
Tax Quota – Finland
0,437
0,439
0,441
0,443

10. Implicit Tax Rate I.
The implicit tax rate on employed labour is defined as the sum of all direct and indirect taxes and employees' and employers' social contributions levied on employed labour income divided by the total compensation of employees working in the economic territory increased by taxes on wage bill and payroll. 
The ITR on labour is calculated for employed labour only.
Implicit tax rates measure the average effective tax burden of economic income or activities.
The term "implicit tax" is also used to describe an indirect cost that results from a government policy. For example, environmental regulations might impose an implicit tax on businesses that have to spend money to comply with them.

11. Implicit Tax Rate II.
They are calculated as the ratio of total revenue from taxes and social contributions by economic function and a potential tax base.
It is the ratio of taxes on consumption and final consumption expenditure of household on the economic territory.
The term "implicit tax" is also used to describe an indirect cost that results from a government policy. For example, environmental regulations might impose an implicit tax on businesses that have to spend money to comply with them.

12. Implicit Tax Rate - example
the Czech Republic
2013
2014
2015
2016
Total receipts from taxes and social contributions (mil. EUR)
54 970,7
53 094,9
57 393,7
61 387,5
Potential tax base(mil. EUR) ,6 ,7 ,4 ,9
Finland
2013
2014
2015
2016
Total receipts from taxes and social contributions (mil. EUR)
88 958,0
90 304,0
92 377,0
95 462,0
Potential tax base(mil. EUR) ,2 ,9 ,7 ,8
Results (%)
2013
2014
2015
2016
ITR– the Czech Republic
39,1
39,4
39,2
39,8
ITR – Finland
43,7
43,9
44,1
44,3

13. Effective tax rate
The effective tax rate is the average rate at which an individual is taxed on earned income, or the average rate at which a corporation is taxed on pre-tax profits.
Individual: Total Tax Expense / Taxable Income
Corporation: Total Tax Expense / Earnings Before Taxes
Effective tax rates simplify comparisons among companies or taxpayers. This is especially true where a progressive, or tiered tax system is in place. Those subject to progressive taxes will see different levels of income taxed at different rates.

14. Effective tax rate - example
income
Tax Rate
First $
10%
$ $
15%
$ $
25%
Over $
35%
Company A Annual Pre-Tax Earnings = $600,000
Total Taxes Paid = ($100,000 *10% + $400,000 * 15% + 100,000 * 25%) = $95,000
Effective Tax Rate = $95,000 / $600,000 = 15.8%
Company B Annual Pre-Tax Earnings = $900,000
Total Taxes Paid = ($100,000 *10% + $400,000 * 15% + $400,000 * 25%) = $170,000
Effective Tax Rate = $170,000 / $900,000 = 18.9%
In the example above, note that both Company A and Company B are in the 25% marginal tax bracket. However, this does not provide a fair comparison of their tax exposure. In reality, Company B has much more money taxed at the uppermost rate than Company A, and has to pay nearly twice as much in taxes.
Fortunately, the difference is clearly visible in the higher effective tax rate of Company B (18.9% vs. 15.8%). Thus, effective tax rate is typically a more accurate reflection of a company's tax liability than its marginal tax rate.
It is important to note that the amount of cash tax payments that an individual or corporation actually pays out may differ materially from the amount of tax expense in a given period. This is because most companies prepare two different sets of financial statements: one for reporting purposes and one for tax purposes.

15. Microeconomic point of view
Income Tax as a part of the salary in the Czech Republic
Super-gross wage
Gross wage
Netto wage
Tax reliefs

16. Microeconomic point of view – example
Miss Nováková has a grosss wage CZK and 2 children.
1. step: Super-gross wage
gross wage + social insurance paid by the employer (25%) + health insurance paid by the employer (9%)
CZK + 0,25* CZK + 0,09* CZK
CZK CZK CZK = CZK

17. Microeconomic point of view – example
2. step: Income tax advance before deduction of discounts (15%)
CZK * 0,15 = CZK
discounts
tax benefit for the taxpayer – CZK
tax benefit for first child – CZK
tax benefit for second child – CZK
3. step: Income tax advance after deduction of discounts
6.030 – – – = CZK

18. Microeconomic point of view – example
4. step: social insurance paid by the employee (6,5%) + social insurance paid by the employee (4,5%)
CZK*0, CZK*0,045
1.950 CZK CZK = CZK
5. step: netto wage
gross wage - income tax advance after deduction of discounts – insurance paid by the employee
CZK – – = CZK

19. Other discounts on income tax
Discount for disability pension I and II. degree
2 520 CZK (monthly 210 CZK)
Discount for ZTP / P card holder
CZK (monthly 1345 CZK)
Tax benefit for the third and next child
CZK (monthly 2017 CZK)

20. Bibliography Eurostat
HILLMAN, Arye L. Public finance and public policy: responsibilities and limitations of government. 2nd ed. New York: Cambridge University Press, ISBN
ROSEN, H. S., T. GAYER a A. CIVAN. Public finance. 10th ed., global ed. Maidenhead: McGraw-Hill Education, c2014. ISBN
GRUBER, Jonathan. Public finance and public policy. 3rd ed. New York: Worth Publishers, c2011. ISBN
Hindrinks, J, Myles, D., G. Intermediate Public Economics, MIT, 2006

21. THANK YOU FOR ATTENTION