Two countries, two paths. Tax burdens and well-being of minimum wage earners in Ireland and Hungary
Abstract
The tax burdens on single persons vary across the world. This leads to the question of how differences in the tax system, and thereby in the tax burdens, affect the welfare of individuals. This study examines the differences between Ireland and Hungary, based on the tax burden on single, childless citizens earning minimum wage. Since May 1, 2004, numerous changes have occurred in the tax systems of both countries, significantly influencing the tax and contribution burdens on their citizens, which may also have had an impact on the welfare of taxpayers. According to the research findings, a significant, strong, positive linear correlation can be observed between the Human Development Index (HDI) and the effective tax burdens on single individuals in the highlighted years in both countries. In Ireland, despite a two-rate and progressive income tax system, more complex social security system, and five different VAT rates, the effective tax burden on the analysed single individuals’ minimum wage is significantly lower than in Hungary, thanks to the various reliefs. We conclude that a stable, progressive tax policy has a positive impact on the welfare of the poorer taxpayer segment.
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évi CXVII. törvény a személyi jövedelemadóról.
évi LXXX. törvény a társadalombiztosítás ellátásaira és a magánnyugdíjra jogosultakról, valamint e szolgáltatások fedezetéről.
évi LXXXI. törvény a társadalombiztosítási nyugellátásról.
évi LXXXII. törvény a magánnyugdíjról és a magánnyugdíjpénztárakról.
évi LXXXIII. törvény a kötelező egészségbiztosítás ellátásairól.
évi CXXVII. törvény az általános forgalmi adóról.
évi CLVI. törvény egyes adótörvények és azzal összefüggő egyéb törvények módosításáról.
évi CXXII. törvény a társadalombiztosítás ellátásaira jogosultakról, valamint ezen ellátások fedezetéről.
