Naslov
Companies and Wage Shifting due to changes in Personal Income Taxes: Empirical evidence from a Croatian Tax Reform

Autori
Torma, Jasena : Motik, Nikola

Vrsta, podvrsta i kategorija rada
Sažeci sa skupova, neobjavljeni rad, znanstveni

Skup
International Scientific Conference “Dealing with Uncertainty” Economics of Digital Transformation (EDT) 2022

Mjesto i datum
Rijeka, Opatija, Croatia, 23.06.2022. - 25.06.2022

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Nije recenziran

Ključne riječi
Vladina politika, porezna reforma, plaće
(Government policy, incidence, tax reform, wages)

Sažetak
In 2017 Croatian tax system went through large income tax reform in which marginal tax rates were significantly decreased and individual tax- free allowance was increased. In theory, these income tax changes should increase wages or employment-related income if employers do not change employment contracts. But, the reform also increased the incentive to avoid taxation by changing workers income. Empirical evidence on the degree of personal income tax shifting to employees via the wage level is highly controversial and rare. Using a single country event study with a panel of Croatian workers, we use difference-in difference method were we treated private sector as a treatment group and state-owned companies as a valid control group to answer our research question: Do wages rise when income related taxes fall? This paper estimates that on average wages after tax reform have increased but this reform was not effective for each individual particularly depending on type of economic activity. Our paper links on a vast literature regarding the business tax competition to small but growing literature on the effective incidence of the income taxation.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA