The Effects of Solidarity, Income, and Reliance on the State on Personal Income Tax Preferences. The Case of the Czech Republic

Abstract

The current increase in government spending, caused by COVID epidemics and the increasing visibility of leftist political groups in public media, emphasizes the short-term need for sustainable income taxation. In the long run, rising inequality worldwide makes taxation of high-incomes indispensable for sustainable economic development. This paper empirically studies public attitudes on taxation related to income, preferences for solidarity vs. individual performance, and reliance on the state in the Czech Republic. In this Eastern European country, the dichotomies above bear even more importance due to the communist past. We apply the hierarchical regression analysis with smoothing spline transformations to a representative sample of public opinion data (N = 1104, aged 15–95 years, M ± SD: 47.74 ± 17.39; 51.2% women, 18.50% with higher education). The results suggest that income was associated with the perception that taxes for the rich are inadequately high but was unrelated to perceptions of tax adequacy for average and poor groups of respondents. Higher solidarity and reliance on the state were associated with the desire to increase taxation of high-incomes and decrease taxation of poor income groups. Surprisingly, the reliance on the state was associated with a desire to decrease taxation of average-incomes and total taxation while increasing tax progressivity. Preferences for solidarity were associated with higher preferred overall taxation and more tax progressivity. The explanatory powers of preferences for solidarity and reliance on the state in explaining the variation in tax preferences are at least equivalent and, in some cases, twice as large as the explanatory power of the age, gender, education, and income altogether. The results above present new mechanisms that can contribute to sustainable endogenous economic development.

Income Tax for Microenterprises in the COVID-19 Pandemic: A Case Study on Ecuador

“…On the contrary, in our results, the damage caused by this regime is evident. Income tax continues to be the main means of collecting taxes, and governments need to cover their expenses, but it is necessary to design more sustainable systems oriented to collective well-being [13,31].…”

“…The authors of [31] empirically studied public attitudes about income tax in times of COVID. The results suggested that income is associated with the perception that taxes for the rich are inappropriately high but was not related to perceptions of the adequacy of taxes for the average and poor groups of respondents.…”

Does the Type of Nominal Personal Income Tax Rate Affect Its Progressivity? A Case Study from the Czech Republic

“…This is due to the construction of the tax base for dependent activity and the maximum assessment bases for social security contribution. In that period, the tax base was a super-gross wage, which can be formally written according to equation (8),…”

Understanding Public Support for the Flat-Rate Personal Income Tax in a Post-Communist Context: The Case of Romania

“…Quite unexpectedly, although various perspectives on the concept are frequently put forward in relation to the welfare state and redistribution, solidarity is almost never investigated as a determinant of fiscal preferences. The exception is a recent article by Cabelkova and Smutka [26]. As a broad concept, solidarity is described as some sort of bond that holds a group or a community together [27].…”

“…These targets of solidarity are social groups that may be located closer or more remotely in relation to the individual, and thus various levels of solidarity are discussed: family/local solidarity, social solidarity, and global solidarity [32][33][34][35]. A reasonable expectation, partially confirmed in the analyses of Cabelkova and Smutka [26] of citizens from the Czech Republic, is that there is a strong and positive relation between solidarity and preferences for progressive PIT.…”