Controversy over personal income tax

For some time now, there has been strong pressure from advocates of a proportional personal income tax aiming at replacing the current progressive taxation . with a linear one. Various non-new arguments are used against the progressive nature of personal income tax. At the same time, proportional personal income tax is presented as an indispensable means of stimulating economic growth, reducing unemployment, healing public finances and restoring tax fairness. A new phenomenon is the multiplied intensity of the pressure from enthusiasts to replace the progressive . proportional personal income tax, using various forms of influence, including the mass media, both private and public. The personal income tax introduced in 1992 (Act 1991) replaced five taxes with differentiated sources of income. It has an almost universal character. It excludes income from agriculture, with the exception of special divisions, and forestry, as well as income exemptions specified in the Act. Compared to solutions found around the world, including in countries with a similar level of economic development, the assumptions of the Polish personal income tax system show significant differences. The application of three tax rates (20 per cent, 30 per cent and 40 per cent) limited the adjustment of the tax burden to the taxpayers’ ability to pay. The level of the maximum rate in comparison with the maximum rates applied in other countries was, and still is, moderate after the tax reforms of the 1990s. On the other hand, the same cannot be said of the lowest rate, which can be considered high, especially given the very low level of the tax-free amount. Also, the tax thresholds adopted limit the adjustment of the tax burden to the taxpayers’ ability to pay.