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Optimal taxation of employment and self-employment : evidence from Poland and implications
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1830-7728
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EUI MWP; 2019/08
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ZAWISZA, Tomasz, Optimal taxation of employment and self-employment : evidence from Poland and implications, EUI MWP, 2019/08 - https://hdl.handle.net/1814/64166
Abstract
I examine two central questions bearing on the optimal relative taxation of employment and self-employment income using the 2009 Polish reform. Firstly, I estimate the degree of substitution on the extensive margin between the employment and self-employment tax bases, as well as the intensive-margin elasticities for these tax bases separately. The baseline estimates of the intensive-margin elasticities are around 0.2 for the employed and around 0.7 for the self-employed. Secondly, I characterize optimal non-linear employment and self-employment tax schedules in a theoretical model, finding rationale for taxation of self-employment income at lower marginal and total tax rates.