Personal income tax as a tool for implementing state social policy

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Personal income tax (PIT) is one of the most important taxes in Ukraine due to its economic, social and political role. With its help, one can regulate the investment process, the level of real incomes and maintain stability in society. However, the potential of this tax in Ukraine is not fully used. The purpose of the study is to identify the main problems of PIT and further directions of its implementation as an instrument of social policy. Laffer’s tax theory, on the dependence of economic efficiency of taxation on lower tax rates and the degree of progressiveness of taxes, was taken as a conceptual line of research. Consideration of world trends in the practice of PIT allowed tracing its evolution and choose the methods of its optimization that are acceptable for Ukraine. The use of comparative and statistical analyses, grouping, structural modeling method, index method and systematization of results allowed formulating the author’s version of the income taxation reform in Ukraine. The introduction of a progressive taxation scale should take into account the quality of tax administration, the availability of tax benefits, deductions and loans, the amount of fines, and public perception of the tax system in addition to quantitative results. The proposed family taxation, based on the differentiation of taxpayers by their marital status, actual solvency through the introduction of family rates and the establishment of progressive rates of personal income tax, will fully implement the principle of social justice in the distribution of income.

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    • Table 1. Dynamics of the main indicators of living standards in Ukraine
    • Table 2. The proposed scale of personal income taxation in Ukraine
    • Table 3. Calculation of the tax base and PIT according to the proposed PIT scale
    • Table 4. Family coefficients in France
    • Table 5. Personal income tax contingent rates
    • Conceptualization
      Liliia Barannyk, Victoriia Taranenko, Tetyana Koriahinа
    • Methodology
      Liliia Barannyk, Victoriia Taranenko, Ludmyla Rybalchenko
    • Project administration
      Liliia Barannyk, Olena Dobrovolska
    • Validation
      Liliia Barannyk, Tetyana Koriahinа
    • Writing – original draft
      Liliia Barannyk, Olena Dobrovolska
    • Data curation
      Olena Dobrovolska, Tetyana Koriahinа, Ludmyla Rybalchenko
    • Visualization
      Olena Dobrovolska, Victoriia Taranenko, Ludmyla Rybalchenko
    • Writing – review & editing
      Olena Dobrovolska, Victoriia Taranenko
    • Investigation
      Victoriia Taranenko, Tetyana Koriahinа, Ludmyla Rybalchenko
    • Formal Analysis
      Tetyana Koriahinа, Ludmyla Rybalchenko