Effects of Personal Income Tax on Income Distribution: Example from Bulgaria

CONTEMPORARY ECONOMIC POLICY, October 1996

13 Pages Posted: 19 Nov 1996 Last revised: 27 Apr 2011

Date Written: April 25, 2011

Abstract

This study utilizes the 1992 Bulgarian household budget survey to analyze the distribution of income and income tax burden. Results indicate that the country is characterized by low income inequality, though this is changing rapidly. The findings also show that the present income tax system is progressive and that the urban sector pays much more relative to its income. Despite a steeply graduated statutory tax rate schedule, effective progression is rather modest, indicating significant tax evasion. However, one must view the results of progressivity and urban bias cautiously. As in-kind income becomes monetized and as the economy becomes more market-oriented, both progressivity and urban/rural differences will wane over time.

JEL Classification: D31, H24, O15

Suggested Citation

Hassan, Fareed M.A. and Bogetic, Zeljko, Effects of Personal Income Tax on Income Distribution: Example from Bulgaria (April 25, 2011). CONTEMPORARY ECONOMIC POLICY, October 1996, Available at SSRN: https://ssrn.com/abstract=4444

Fareed M.A. Hassan (Contact Author)

World Bank ( email )

1818 H Street, N.W.
ECICO
Washington, DC 20433
United States
202-473-5095 (Phone)
202-477-8518 (Fax)

Zeljko Bogetic

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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