ABSTRACT
This chapter presents the empirical literature on flat taxes by focusing on recent flat tax proposals in three Eastern European countries – Estonia, Hungary and Slovenia. It explains the alternative scenario not only for the country of origin but also for the two other countries, thereby three in total for each country. The chapter focuses on the description of the existing tax and benefit schemes and the three alternative scenarios. It describes how the hypothetical flat tax schemes would affect inequality and poverty of the total population and that of specific age groups. The chapter shows how the change of tax burden affects the budgetary balance and households at various income levels. The fiscal effect of the flat tax scenarios simulated here largely depends on the actual tax system. The chapter assesses the impact on incomes at the household level to determine who are the winners and losers of these alternative reforms.
