WAGES: FUNCTIONS AND MECHANISMS OF TAX REGULATION

Abstract

The relevance of this research topic stems from the social significance of wages, which constitute the primary source of monetary income for the population. The population's standard of living and social stability within the workforce depend on how effectively wages fulfill their functions. Furthermore, wages serve as the basis for calculating personal income tax and insurance contributions, and act as a source for future pension savings, as wage levels influence the size of future pensions. Contradictions arise within the "employee–employer–state" system regarding how to ensure a decent level of remuneration for the reproduction of the workforce without diminishing incentives for high-productivity labor. Tax regulation serves as one of the tools for achieving a balance of interests. The study aims to analyze wage functions and tax regulation mechanisms, identify the interconnections between them, and evaluate the effectiveness of existing instruments in terms of achieving socio-economic goals. The research objectives include defining the essence and functions of wages and examining tax instruments (rates, benefits, deductions, and employee payments funded from profits). Methodologies employed include analysis and synthesis, generalization, grouping, tabular presentation, dynamic analysis, comparative analysis, and economic-statistical methods. The study reveals significant regional wage disparities in Russia (with wage levels in four federal districts falling below the national average) and the ineffectiveness of state regulation regarding remuneration and population income—including tax-based regulation—as evidenced by a lack of improvement in key indicators such as income ratios, the Gini coefficient, and the income replacement rate.