abstract: 'Any preferential treatment of income of certain population groups at

  setting their share on state costs results in harmful disproportions in

  consequence. Valid taxing conditions of traders and self-employed

  persons for the last three years in the Czech Republic, lead to labour

  market distortions. This paper gives evidence of extreme differences in

  tax burden of various income groups of self-employed persons compared to

  wage and capital yield taxation. Remarkable disparities are apparent

  both at lower and medium-high incomes and at peak incomes exceeding CZK

  10 million per year.

  Presented calculations and figures confirm that particularly freelance

  occupations, consulting services as well as other trading professions

  are groundlessly favoured. Their bearers can transmit real costs on

  their clients and yet they are eligible to apply lump sum expenses

  ranging from 40 \% to 60 \% of income. Thus, they reduce their taxable

  income as well as basis of assessment for obligatory payments into

  insurance system in this way. Unlike them, some traders and people in

  position of employees cannot use such an optimization from practical

  reasons.

  This systemic distortion constitutes a groundless differentiation in a

  share of different citizens on financing of state expenditures. In a

  broader sense, it might even contradict constitutional order of the

  Czech Republic. At least, this situation harms significantly a

  willingness of citizens to take a share in solidarity system of

  financing state operation and its social system voluntarily.

  Diverse tax burden imposes a pressure on the labour market or more

  precisely leads to crowding-out of wage earners out of the labour market

  into the sphere of so called ``svarzsystem{''''} (evasion of labour law

  provisions by a conclusion of a commercial-contractual relationship).

  Secondary, but fundamental result is a distortion of macroeconomic

  statistics that provide documentary evidence for labour market

  development.'
affiliation: 'Sojkova, L (Corresponding Author), Tech Univ Liberec, Ekonomicka Fak,
  Katedra Ekonomie, Liberec, Czech Republic.

  Tech Univ Liberec, Ekonomicka Fak, Katedra Ekonomie, Liberec, Czech Republic.'
author: Sojkova, Lenka
author-email: lenka.sojkova@tul.cz
author_list:
- family: Sojkova
  given: Lenka
da: '2023-09-28'
files: []
issn: 1212-3609
journal: E \& M EKONOMIE A MANAGEMENT
keywords: 'taxation; tax burden; state tax policy; social and health insurance;

  labour market'
language: Czech
number: '3'
number-of-cited-references: '9'
orcid-numbers: Sojková, Lenka/0000-0002-0563-3419
pages: 6-15
papis_id: faa6666de8469b9cce6537664a4cc0cb
ref: Sojkova2011labourmarket
researcherid-numbers: Sojková, Lenka/AAE-3524-2022
times-cited: '1'
title: LABOUR MARKET DISTORTIONS VIA TAXATION SYSTEM OF NATURAL PERSON
type: article
unique-id: WOS:000296315100001
usage-count-last-180-days: '0'
usage-count-since-2013: '11'
volume: '14'
web-of-science-categories: Economics; Management
year: '2011'