Taxation

10 Key excerpts on "Taxation"

• 

  eBook - ePub

  A Treatise on Political Economy

  • Gary Hull, Gary Hull, Jean-Baptiste Say(Authors)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  Chapter VIII Of Taxation.

  Section I Of the Effect of all hinds of Taxation in general.

  Taxation is the transfer of a portion of the national products from the hands of individuals to those of the government, for the purpose of meeting the public consumption or expenditure. Whatever be the denomination it bears, whether tax, contribution, duty, excise, custom, aid, subsidy,* grant, or free gift, it is virtually a burthen imposed upon individuals, either in a separate or corporate character, by the ruling power for the time being, for the purpose of supplying the consumption it may think proper to make at their expense; in short, an impost, in the literal sense.

  It would be foreign to the plan of this work, to inquire in whom the right of Taxation is or ought to be vested. In the science of political economy, Taxation must be considered as matter of fact, and not of right; and nothing further is to be regarded, than its nature, the source whence it derives the values it absorbs, and its effect upon national and individual interests. The province of this science extends no further.

  The object of Taxation is, not the actual commodity, but the value of the commodity, given by the tax-payer to the tax-gatherer. Its being paid in silver, in goods, or in personal service, is a mere accidental circumstance, which may be more or less advantageous to the subject or to the sovereign. The essential point is, the value of the silver, the goods, or the service. The moment that value is parted with by the tax-payer, it is positively lost to him; the moment it is consumed by the government or its agents, it is lost to all the world, and never reverts to, or re-exists in society, This, I apprehend, has already been demonstrated, when the general effect of public consumption was under consideration. It was there shown, that however the money levied by Taxation may be refunded to the nation, its value is never refunded; because it is never returned gratuitously, or refunded by the public functionaries, without receiving an equivalent in the way of barter or exchange.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Taxation by Political Inertia

  Financing the Growth of Government in Britain

  • Richard Rose, Terence Karran(Authors)
  • 2018(Publication Date)
  • Taylor & Francis

    (Publisher)

  It is attractive for politicians averse to raising tax rates and broadening the tax base to rely upon economic growth rather than increased tax effort to produce more tax revenue. Each increase in tax effort induces a disproportionate decrease in take-home pay. If a government claims 40 per cent of the national product in Taxation, an increase in tax effort to 45 per cent will reduce the private-sector share by 8.3 per cent (that is, from 60 to 55 per cent).

  The reasons why government favours economic growth are multiple: in a booming economy there is a lot more money to spend, and fewer political difficulties. Moreover, as economic growth is cumulative, in the course of a five-year Parliament an annual growth rate of 2.5 per cent will, by a process of compounding, increase the national product by 16 per cent, and total tax revenue with it.

  Viewing the economy as a source of tax revenue imposes a one-dimensional perspective upon a multi-dimensional set of activities. Models of the economy designed to illustrate processes important in economic theory often give very little attention to Taxation. From a broad economic perspective, issues of prices and wages, investment and growth and foreign exchange rates appear of pervasive importance. Taxation appears only as an intervening variable in the economic system as a whole (Wallis et al., 1984). In many contexts, Taxation can be seen as a fiscal instrument used for ulterior, non-revenue ends. Economic activities are reduced by tax laws to such categories as taxable income, or goods liable to value added tax. The flow of income and expenditure through the economy is not the concern of tax authorities, whose primary job is to divert a portion of that flow to the fisc through appropriate administrative means.

  Certainty and Predictability

  Government is concerned with the certainty of revenue and, because budgets are statements about future taxing and spending, about the predictability of revenue. A good tax is not only easy to collect but also will yield an amount of revenue that can be predicted when forecasts are required for the budget in the year ahead. Otherwise the Treasury may make policies based upon misleading assumptions about the public-sector borrowing requirement, the difference between the forecast total expenditure and total revenue.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Handbook on Taxation

  • W.Bartley Hildreth, W. Bartley Hildreth(Authors)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  Taxes are imposed by congressional and legislative fiat. Legislation defines the legal incidence of the tax. The excise tax on tobacco is remitted to the government by tobacco wholesalers, but the true incidence of the tax is borne by any number of people, starting with the consumer, to the retailer distributing the product, to the wholesaler, and to the manufacturer. The legal incidence of a tax is clear, but the economic incidence is much more difficult to identify.

  Legal incidence is important for administrative purposes, but economic incidence is much more significant for estimating and predicting the impact that the tax might have on the economy. The personal income tax will typically have the same legal and economic incidence; that is, the individual taxpayer will remit the tax to the government and will bear the full burden of the tax. The corporate income tax will be remitted to the government by the corporation, but exactly on whom the burden will fall is subject to debate. The stockholders may absorb some of the tax burden, the corporation’s customers may incur some of the tax burden through higher prices, the corporation’s labor and other such inputs may incur some of the tax burden through lower wages or lower rental rates for property or for leased equipment, or there may be some scattering of the tax burden based on market conditions at the time.

  Every tax that is not directly imposed on an individual will most probably have an economic incidence that will diverge from the legal incidence of the tax. Taxes on businesses; taxes on energy resources; taxes on tobacco, alcoholic beverages, airlines, telecommunication services, and other such products; import fees; and other taxes that are not directly levied on an individual taxpayer will be shifted if at all possible from the entity legally liable for the tax to some other person involved either with the production or consumption of the product. Exactly on whom the tax burden will ultimately fall depends on market conditions.

  IV.   FEDERAL, STATE, AND LOCAL Taxation

  Taxation is Taxation from the perspective of someone having to pay the tax. It does not matter if it is levied by the federal government, the state government, or the local government. A person has to pay the tax. Federal, state, and local governments have selected different types of taxes to finance their respective public services, however. The federal government almost exclusively uses the personal income tax and the payroll tax. These taxes provide about 80 percent of all revenues received by the federal government. Corporate taxes make up about 11 percent of all federal tax collections; excise taxes make up about four percent; and other taxes such as inheritance taxes and import fees, make up about five percent of federal tax collections. Federal tax collections are not highly diversified.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  The Economics You Need

  • Enrico Colombatto(Author)
  • 2016(Publication Date)
  • Taylor & Francis

    (Publisher)

  6 Taxation and regulation

  DOI: 10.4324/9781315658988-7

  6.1 On the role of government

  Governments play a substantial role in today's economies. They try to stabilise the business cycle through monetary and fiscal policies, to intervene in regulating international trade and financial transactions, and to redistribute income to the benefit of the poor members of the community. Moreover, governments engage in restraining or prohibiting activities deemed contrary to the public interest; encouraging the supply of goods and services that the market process would otherwise produce in inadequate amounts; and delivering services that people wish to ban from the marketplace (for example, police, justice and defence).

  Since the analyses of the role, legitimacy, and effectiveness of government intervention are outside the scope of this book, we shall not investigate the merits of all these actions, nor shall we discuss whether governments keep their word. Rather, we take it for granted that government intervention exists, that most citizens believe it is desirable, and we focus on the tools that governments resort to in order to obtain their goals. We analyse Taxation and regulation in this chapter, deferring to later parts of the book the study of monetary, fiscal and international matters. In particular, the next section presents a general overview of Taxation; sections 6.3 to 6.9 examine the technical features of Taxation and the extent to which it affects taxpayers’ welfare; sections 6.10 and 6.11 deal with regulation.

  6.2 On tax targeting, tax collecting and tax paying

  The world of Taxation includes three key components: tax targeting, tax collecting and tax paying. Tax targeting relates to the economic activities/variables which the tax authorities consider as their goal: specific firms or industries (e.g., to rein in pollution), certain categories of consumption (e.g., to protect individuals’ health against their bad judgement), or some groups of individuals (e.g., for the sake of income redistribution).

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  In the Shadow of Adam Smith

  Founders of Scottish Economics 1700–1900

  • Donald Rutherford(Author)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  The burthen of taxes (is compensated) by the advantage of defence by the laws and arms of the State. (Kitagawa 1994: 197) Smart similarly regarded Taxation as based on an implicit contract, saying, ‘the government renders us certain services which we pay for with part of our income’ (1900: 5) and ‘The government servants buy their bread and butter from us, and we buy justice, defence, education, etc, from them’ (p. 7). However, he claimed that we ourselves determine the amount we pay. Having recognized that Taxation is the principal means of financing a gov-ernment, and having looked at broad classifications of it, we need now to examine in detail major issues in the study of Taxation: the tax burden, the canons of Taxation, the incidence of Taxation, the land tax, profits tax, indirect Taxation, income tax and tax reform. Tax burden The correct level of Taxation avoids destroying a national economy and improves it: ‘Sometimes a slight additional burden may prove to be an incentive to labour, and a spur to greater diligence and activity’ (Sinclair 1790: 3), but I would argue that if too great a burden the population and wealth decrease. A burden can be regarded in a macroeconomic way as the proportion of national income taxed, or microeconomically as the weight on individuals. As Smart (1900) points out, there is no accurate measure of ‘sacrifice’ and hence a tax burden is not a justification for refusing to pay taxes. Poverty is not an excuse for avoiding Taxation or for refusing to pay for bread, unless one is a pauper. PUBLIC FINANCE 117 Having a low tax burden is an attractive attribute of a state. Smith, at the beginning of his career, had advocated ‘easy taxes’: Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Public Sector Economics

  Made Simple

  • D. I. Trotman-Dickenson(Author)
  • 2014(Publication Date)
  • Made Simple

    (Publisher)

  Suggested Further Reading Brown, C. V., and Jackson, P. M., Public Sector Economics, Martin Robertson, Oxford, 1978. Hicks, U., Public Finance, Cambridge University Press, Cambridge, 1971. Hockley, G. C , Public Finance, Routledge and Kegan Paul, London, 1979. James, S., and Nobes, Α., The Economics of Taxation, Phillip Allan, Oxford, 1978. Kay, J. Α., and King, Μ . Α., The British Tax System, Oxford University Press, Oxford, 1980. Musgrave, R. Α., and Musgrave, P. B., Public Finance in Theory and Practice, McGraw-Hill, New York, 1980. Sandford, C. T., The Economics of Public Finance, Pergamon Press, Oxford, 1981. The New British System of Taxation, H M S O , 1973. Exercises 1 Explain why ad valorem taxes on consumption are regressive. 2 Suggest how customs duties can be used to further a government economic policy. 3 Discuss the arguments in favour of and against a tariff policy. 4 How would you account for the trend away from customs duties? 5 Consider the problems involved in defining 'necessities' and luxuries for the purpose of Taxation. 6 Suggest the criteria for the choice of goods for selective Taxation. 7 Can indirect taxes be made progressive? Illustrate your answer by reference to the British tax system. 8 In what way do licences differ from other forms of Taxation? 9 Consider the merits and demerits of a value added tax. 10 Explain how the burden of a specific tax is reduced by inflation. 10 Taxes on Capital Definition of Capital To consider Taxation of capital it is first necessary to define capital. For tax purposes it means all forms of marketable wealth. Thus, in literature on public finance, in government reports and in legislation, capital and wealth are often used as synonymous terms. Wealth, as fig. 10.1 shows, can take a variety of forms all of which have been, or are, subject to capital taxes with the exception of social capital which represents investment by the state.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Public Finance in Theory and Practice Second edition

  • Holley H. Ulbrich, Holley Ulbrich(Authors)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  Chapter 17 .

  Passage contains an image 11 Principles of Taxation I Efficiency and Equity Issues Introduction

  Given the need to raise revenues to fund the activities of government, it is the task of economists to figure out how to design a revenue system that is both efficient (minimizing distortions in household and business decisions) and equitable (distributing the burden fairly). Figuring out how to best raise revenue has been a central concern of economists at least since Adam Smith devoted an entire book of The Wealth of Nations (1776) to “the revenue of the sovereign,” including his famous dictum that the taxes one pays should be “proportional to the revenue enjoyed under the protection of the state.” David Ricardo, an important nineteenth-century figure in the history of microeconomic theory, titled his most famous book Principles of Political Economy and Taxation.

  Until the latter half of the twentieth century, courses in public sector economics were aptly named public finance, because they concentrated so heavily on the revenue side of the public sector to the neglect of the equally important decisions on the expenditure side. Today the balance has shifted, but an understanding of the principles of tax design, both theoretical and applied, is still a central part of the study of public sector economics.

  Criteria for Evaluating Tax and Revenue Systems

  Every type of tax has positive and negative attributes. Some are more stable than others, or create fewer distortions in household and business decisions. Some are more costly to collect than others. Some are hidden, others highly visible. Some have broad bases, others narrower bases. Certain kinds of taxes are useful for correcting externalities while others may lend themselves to a more equitable distribution of tax liabilities.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Handbook of Public Economics

  • Alan J. Auerbach, Raj Chetty, Martin Feldstein, Emmanuel Saez(Authors)
  • 2013(Publication Date)
  • North Holland

    (Publisher)

  Important recent contributions, focusing on specific economic channels, include Gordon and Li (2009), who emphasize the link between Taxation and formal finance, and Kleven, Kreiner, and Saez (2009) who emphasize third-party reporting through firms. Of course, the standard economic approach also studies the influence of the tax system on the economy. Well-designed tax systems can minimize the efficiency losses imposed by taxes and even raise the growth rate in endogenous-growth models, as in Barro and Sala-i-Martin (1992). Tax revenues can be spent on public goods and investments that make the economy more productive, as in Barro (1990). Tax design in a developing country context has to take into account the information about behavioral responses needed by governments, as in the papers collected in Gordon (2010) and Newbery and Stern (1987). The standard economic view has also dealt with the issues of administration and compliance—see Slemrod and Yitzhaki (2002) for an overview. These issues also take center stage in the influential writings of Richard Bird (see, e.g., Bird & Oldman, 1980). 4 Looking at the recent experience through the lens of effective administration, Bird (2004) observes that “the best tax policy in the world is worth little if it cannot be implemented effectively”. The greater reliance on trade taxes (and seigniorage) than income taxes in poor economies, which we discuss further below, has been noted and discussed by many authors—see Burgess and Stern (1993), Hinrichs (1966), and Tanzi (1992), for early contributions. But important as it is, economic development does not mechanically translate into increases in the tax take. Even in fast-growing economies, such as India and China, decisions by the state are needed to yield a dividend in the form of a higher tax share in GDP. For example, Piketty and Qian (2009) argue that increases in exemptions have meant that income tax revenues in India have stagnated at around 0.5% of GDP since 1986

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  The Economic Thought of Henry Calvert Simons

  • G.R. Steele(Author)
  • 2018(Publication Date)
  • Routledge

    (Publisher)

  Any subsequent changes give rise to windfall gains/losses. For example, lev-ies upon real estate that have become factored into market transactions are analogous to ‘obligations under a special kind of mortgage held by the state’ ( ibid., p. 33, fn. 20). If those obligations were then to be removed, real estate values would increase. So, where they have been firmly established over long periods, a case might be made for retaining property taxes ‘permanently at the established level’ ( ibid., p. 34). Simons gives analogous consideration to windfall gains resulting (for ex-ample) from a rise in property values when (say) a new road affords improved access. It would be iniquitous to approve such windfall gains. Purely eco-nomic considerations require those who benefit, either directly or indirectly, to be levied accordingly. One clear exception relates to the net benefit of road networks to vehicle users. Given that private benefits accrue in direct proportion to the use of fuel, a duty on fuel provides ‘a rare instance in which a decisive argument can be made for a commodity tax’ ( ibid., p. 38). There is one category of charges where, regardless of time or circumstance, there is no justification. Tariffs and excise duties vary merely in their degree of badness by their respective distortions to resource allocations and their contribution to inequality. 10.5 The base and the rates The primary relevance of Taxation is as ‘an instrument of economic control, [and as] a means of mitigating income inequality’ ( ibid., p. 41), where it is desirable for the tax base to leave a minimum of inequities and ambiguities. With those features and ends in mind, Simons points to three definitions of income: (i) the market values of products and services as they are sold; (ii) the values obtained in undertaking arbitrage (reselling items at prices exceeding their purchase price); and (iii) the nebulous concept of a community’s net economic activity – i.e., social income.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Social Policy Review 26

  Analysis and Debate in Social Policy, 2014

  • Farnsworth, Kevin, Irving, Zoë(Authors)
  • 2014(Publication Date)
  • Policy Press

    (Publisher)

  65 FOUR The political economy of Taxation in the 21st-century UK Sally Ruane and David Byrne Introduction Taxation is always on the political agenda but, in a context of a government programme of deficit reduction principally through cuts to the welfare state rather than tax rises, it is notable that ‘fair Taxation’ has become a major political issue. It has been taken up not only by political activists and trade unions but also by the House of Commons Public Accounts Committee in relation both to tax avoidance as an industry and to the abilities of particular transnational corporations to avoid paying corporation tax.While all the main parties endorse austerity, the extent to which paying tax seems to be a voluntary activity, both for very affluent individuals/households and corporations, has become a public scandal and source of genuine popular discontent. The aim of this chapter is to offer a class analysis of Taxation and set out some existing proposals that could increase the progressivity and redistributive potential of the UK tax system. After an overview of the main taxes, the chapter will present a selective history of Taxation, with a particular emphasis on the role of taxes in mediating the relationship of the propertied and labouring classes. It will then examine the functions of Taxation from a political-economy perspective, and some of the means by which the tax system has been modified since the 1980s with the effect of reducing the relative contribution of the affluent and large corporations. Finally, it will outline some proposals that can contribute to addressing the enormous increase in inequality in the UK since the 1970s. The main UK taxes in 2012 First, we will consider what taxes are currently collected in the UK. Taking the forecasts for 2012/13 as a snapshot (Table 4.1 below), we see

  Sign up to read

  Learn more about book