The redistributive effect of the Hungarian flat tax and family allowance system
Bibliographic Data
| ID | 21281920 |
|---|---|
| Authors | Judit Krekó (0000-0002-3697-323X, Budapest Institute for Policy Analysis Ltd., Dohány utca 84, 1074, Budapest, Hungary, corresponding author), Hanna Erős (Budapest Institute for Policy Analysis Ltd., Dohány utca 84, 1074, Budapest, Hungary, corresponding author), Bori Greskovics (Budapest Institute for Policy Analysis Ltd., Dohány utca 84, 1074, Budapest, Hungary, corresponding author), Áron Hajnal (0000-0001-6266-0360, Budapest Institute for Policy Analysis Ltd., Dohány utca 84, 1074, Budapest, Hungary, corresponding author), Ágota Scharle (0000-0003-4838-8764, Budapest Institute for Policy Analysis Ltd., Dohány utca 84, 1074, Budapest, Hungary, corresponding author) |
| Year | 2023 |
| Volume | 73 |
| Issue | 4 |
| Pages | 481-503 |
| Publication date | 2023-12-12 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Acta Oeconomica (JOURNAL) |
| Journal identifiers | ISSN: 0001-6373 • E-ISSN: 1588-2659 |
| Publisher | Akademiai Kiado Zrt. (PUBLISHER • HU) |
| DOI | 10.1556/032.2023.00011 |
| OpenAlex | W4361289755 |
| Language | EN |
| Citations received | 3 |
The study examines the income redistribution effects of the Hungarian flat-tax and the recently introduced family allowance scheme. They were done on the basis of people's individual data for 2007, 2011 and 2020, which yields more accurate estimates than the previous studies based on aggregate or survey data. Between 2011 and 2013, progressive taxation was abolished, and a flat income tax was introduced, along with a substantial widening of pre-existing family tax allowances. We find that the tax reform has favoured high-income earners and taxpayers with children, while the main losers were low-income and/or childless workers. While the share of family tax allowances is somewhat lower for the high-income deciles, this effect is in practice negligible, therefore the income tax system can still be considered flat. The family tax allowance scheme favours wealthy families with many children over low-income families with fewer or no children. The biggest winners of the scheme are the taxpayers in the top income decile with three or more children: these 22,000 taxpayers (that is, 2% of all recipients) receive 10% of the total amount of the family tax allowance, and almost a third of the credit allocated to families with three or more children
Allowance (engineering) · Decile · Demographic economics · Economics · Flat tax · Gross income · Income tax · Labour economics · Public economics · Redistribution (election) · State income tax · Tax reform · Corporate Taxation and Avoidance · Gender, Labor, and Family Dynamics · Taxation and Compliance Studies
| Citations per year | 3 |
|---|---|
| Citation span | 2025 - 2026 (2) |
| Highly cited | No |