Econometric Modeling of the Correlation Between the Type of Income Taxation of Natural Persons and the Standard of Living in the E.U

• Main Author: Anca Buziernescu
• Format: Article
• Language: English
• Published: Ovidius University Press 2019-01-01
• Series: Ovidius University Annals: Economic Sciences Series
• Subjects: flat tax rate; progressive tax rate; economic well-being; correlation; regression
• Online Access: http://stec.univ-ovidius.ro/html/anale/RO/wp-content/uploads/2020/02/Section%20I/3.pdf

The purpose of the paper is to pursue the economic and mathematical correlation between the type of income taxation of natural persons and the indicators that reflect the economic well-being of a country. The starting point of this paper is given by the researches carried out on the topic of proportional tax rate (we shall name it flat tax rate)versus progressive tax rate, at the level of the E.U.existing 8 countries that applythe flat income tax and 20 countries that have preferred the progressive tax rate. The analysis of the correlation between the income tax, calculated by applying the flat income tax and the one determined with the help of the progressive tax rate, and the macroeconomic indicators: GDP/inhabitant, the unemployment rate, the national minimum wage, the risk of poverty, confirmed the existence of an economic and mathematical relation between them, a relation that we established with the help of the SPSS program. The period analysed from an econometric point of view is 2009 - 2018, the main data source being Eurostat.