Analysis of the Global Principles of Personal Income Taxation

Анотація

This article is aimed at researching the system of taxation of personal income in Ukraine and the world, as well as a making forth a proposal to reform the existing system of taxation of personal income in Ukraine. The basics of taxation of personal income in the economically developed world countries, such as Germany, USA, France, Great Britain, and Poland, are analyzed. The carried out analysis displays the feasibility of reforming the current principles in the following directions: changing the taxation base in favor of the average household income; introduction of progressive taxation; introduction of a zero interest rate; focus on social justice by taking into account marital status and the presence of dependents; accounting for annual income. Taking into account the current status of the national economy, it can be noted that the thoughtless copying of the world experience of the tax model for the current realities of Ukrainian economy is untenable. At the same time, the experience of the high-income countries shows that such an approach should help to reduce income stratification. That is why it is advisable to introduce a proportional taxation system. Applying a moderate progressive scale of 10 to 40% would reduce the tax burden on the low- and middle-income taxpayers, and the introduction of a 0% rate would protect low-income citizens. With the introduction of the proportional rate, Ukraine will achieve the long-awaited balance between income, and, as a result, will increase revenues to the budget. At the same time, reducing the tax burden on the low- and middle-income citizens should solve the problem of shadow wages, as the amount of taxes will decrease and the social guarantees for workers will remain. The experience analyzed demonstrates the efficiency of the proposed steps and proves the need for the specified reforms, providing vivid examples of the results of such changes.

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