This thesis examines the impact of tax deductions for dependent family members and selected social transfers on social equity in Slovenia. The central research problem is whether the current system of family-related tax deductions effectively reduces income inequality or whether it relatively benefits middle- and higher-income groups more. The purpose of the thesis is to assess the redistributive effectiveness of tax deductions compared with that of social transfers and to evaluate their alignment with the principles of the welfare state, horizontal equity, and vertical tax equity.
The methodology is based on legal-normative, descriptive, comparative, and empirical analysis. The thesis analyses key legislation in the fields of personal income tax, social assistance benefits, and rights from public funds. It also uses domestic and international literature, public finance data, statistical indicators, and calculations of effects for typical family profiles in different income groups.
The findings show that tax deductions, because they depend on the tax base and marginal tax rate, generally provide greater absolute benefits to taxpayers with higher incomes. Their redistributive effect is therefore limited. Social transfers, based on means-testing, are more directly targeted at economically weaker households and contribute more effectively to reducing the risk of poverty.
The thesis provides a basis for the development of a fairer tax and social policy and enhances understanding of the relationship between tax expenditures and direct social transfers as instruments of social policy.
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