"Flat Tax versus Progressive Tax, which performs better in Economic Growth of Albania?"
Authors :
PHD.Matilda Veliu( Lecturer at the Department of Economics, Faculty of Economy, University of Tirana - matildaveliu@gmail.com)
Abstract :

Abstract The main objective of this work is to look at the effectiveness of the tax model applied in recent years on the country's economic growth. Up to 2013 was applied flat tax, and so far to now, progressive tax model, according to the point of view that different political forces have on the influence of fiscal policies in the economy. Finding an optimal taxation rate that affects the economic growth with less negative effects on the other macroeconomic variables, is still a challenge today. The economists share different views, but they agree that the models have to take in consideration both macroeconomic and subjective variables. They define the optimal taxation rate as a percentage of real , consequently different socio-economic environments generate different tax rate and fiscal policies. In the regression model, the main hypothesis to be tested is if flat tax or progressive tax influences better in the economic growth. The data of Albanian macroeconomic framework ( ) are used in order to perform quantitative analysis and various tests, sometimes with a break in 2013. The findings turn out that the use of progressive tax performs better on economic growth than flat tax, however the line between them is not so decisive. Also, the progressive tax model influences positively than flat tax in the segment [40.000 all-70.000 all] of wages, which is the segment where the modal value of Albanian's wage falls, but the differences in relative term from one range to another into the segment, decrease with a small rate.

Key Words :
Flat Tax Progressive Tax Economic Growth