This paper reviews recent developments in the theory of optimal income taxation and draws two broad conclusions with respect to the Hungarian personal income tax system. The first conclusion is that the optimal top marginal tax rate is likely to be higher, perhaps substantially, than the actual...

This paper reviews recent developments in the theory of optimal income taxation and draws two broad conclusions with respect to the Hungarian personal income tax system. The first conclusion is that the optimal top marginal tax rate is likely to be higher, perhaps substantially, than the actual...

This paper presents a unified parametric approach to estimate the impact of taxes and transfers on the participation decision. We extend existing structural form methodologies by considering the effect of both taxes and transfers. In our framework, participation probabilities are determined by...

In this study, using a new microsimulation model, we estimate the long-term fiscal and labour market effects of the changes to the tax and transfer system which were passed into law in 2010 and which are currently planned. According to our results, if all of the currently planned measures are...

The paper studies how high-income taxpayers responded to the introduction of the ‘extraordinary tax on individuals’ in Hungary in 2007. The study is based on a panel of tax returns compiled by the Hungarian Tax Authority for the purposes of this study, containing information on 10 percent of...

We present a new general-equilibrium behavioural microsimulation model designed to assess long-run macroeconomic and fiscal consequences of reforms to the tax and transfer system. General-equilibrium feedback effects are simulated by embedding microsimulation in a parsimonious macro model of a...