Journal of Tax Reform
Analytic Hierarchy Process in Czech Taxpayers’ Decision-Making Regarding their Tax Liability
M. Krajňák
VŠB-Technical University of Ostrava, Ostrava Czech Republic
Abstract
The article deals with taxation of the earned income of natural persons in the Czech Republic in 1993–2017. The goal is to select the year when the tax burden on the earned income of natural persons was the lowest depending on the taxpayers’ preferences, their income level and the number of tax deductions they were entitled to. Based on their income levels, taxpayers analyzed the elements constituting their tax liability and decided whether it became smaller or larger in the given periods. The research methodology includes methods of description, comparison, analysis and synthesis and methods of multi-criteria decision-making. The decision-making analysis focuses on model situations which differ from each other in terms of the amount of gross wage and the number of deductions applied. It is concluded that in most cases, the replacement of the progressive tax rate by the linear rate in 2008 lead to a reduction in the tax burden. The highest decrease of tax liability was observed among taxpayers with below-average incomes. Taxpayers with above-average incomes were subject to a higher tax liability when the nominal tax rate was progressive. Tax credit is yet another factor that influences tax liability; for taxpayers whose income is less than average it takes a form of tax bonus. The most significant change in the legislation regulating income taxation occurred between 2007 and 2008. According to the evaluated criteria weights, the most import criterion for Czech taxpayers is the effective tax rate. The weights of criteria in multi-criteria decision-making analysis were established by using the results of the questionnaire survey conducted by the author among 189 respondents at a manufacturing company in Zlin region.
Keywords
analytic hierarchy process, AHP, consistency, personal income tax, effective tax rate, variant, social security contribution
JEL classification
H240References
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Acknowledgements
This paper is an output of the science project SGS SP2020/10.
About Authors
Michal Krajňák – Ing., Ph.D., Mba, Ll.M.– Business Economy And Management, Assistant Professor, Department Of Accounting And Taxes, Faculty Of Economics, Všb-Technical University Of Ostrava (Sokolská Třída 33, 702 00, Czech Republic); ORCID: 0000-0003-4924-3583; e-mail: Michal.Krajnak@Vsb.Cz.
For citation
Krajňák M. Analytic Hierarchy Process in Czech Taxpayers’ Decision-Making Regarding their Tax Liability. Journal of Tax Reform. 2020;6(2):142–156. DOI: 10.15826/jtr.2020.6.2.079.
Article info
Received May 8, 2020; Revised May 22, 2020; Accepted June 2, 2020
DOI: http://dx.doi.org/10.15826/jtr.2020.6.2.079
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