Distribution of income and taxes in Slovenia and Croatia

The purpose of this article is to estimate the redistributive effects of personal income tax ( PIT) in Slovenia and Croatia. The decomposition of the Gini coefficient developed by Aronson, Johnson & Lambert reveals only a limited difference between potential and actual redistribution, with this loss being a consequence of the different tax treatment of taxpayers with equal pre-tax income. The results also suggest that Croatia experiences greater income inequality among taxpayers than Slovenia. Another decomposition of inequality measure indicates that some types of income especially wages-contribute a constant and high proportion to the overall inequality seen in both countries during the period examined.