Abstract:

When designing and implementing the fiscal policy, the relationship between the income tax rate and the amount of income collected in this way from the state budget, relationship known in the economy under the concept of the Laffer curve, will be taken into account. According to it, the optimal rate of income taxation corresponds to the level at which the economic performance achieved by the economic agent is equated with the optimum withdrawal to the state budget, which will ensure a redistribution of the budgetary income in order to fulfill the functions of social protection and especially of investments in the priority areas for reducing the development gaps between regions and the country's sustainable development in the medium and long term. A rate that exceeds the optimal level has a discouraging effect on investments and employees. It is followed by the reduction of production, the tax base and, implicitly, the budgetary revenues from taxes.