Personal income taxes: the treatment of tax expenditures

ABSTRACT‘Tax expenditures’ are public revenue losses which result from special allowances and reliefs given to various categories of taxpayer for reasons of economic and social policy. In 1983/4 tax expenditures in the personal income tax system cost nearly £11 billion which was equal to 35 per cent of revenue from personal income tax or 9 per cent of total public expenditure. This paper assesses their significance in the context of public expenditure and tax policy. It identifies those allowances and reliefs in the personal income tax system which may be regarded as tax expenditures, evaluates them and compares their cost with direct expenditures in similar areas. Many tax expenditures are inequitable and inefficient; and they are difficult for governments to control. If they were reduced some public expenditures could be protected from cuts, or the general burden of income tax could be reduced.

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The Place of Personal Income Taxes in a Modern Fiscal System

The Annals of the American Academy of Political and Social Science ◽

10.1177/000271623618300111 ◽

1936 ◽

Vol 183 (1) ◽

pp. 78-85

Author(s):

Clarence Heer

Keyword(s):

Income Taxes ◽

Personal Income ◽

Fiscal System

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Taxes and Capital Structure

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109015000174 ◽

2015 ◽

Vol 50 (3) ◽

pp. 277-300 ◽

Cited By ~ 49

Author(s):

Mara Faccio ◽

Jin Xu

Keyword(s):

Capital Structure ◽

Income Taxes ◽

Personal Income ◽

Tax Rates ◽

Personal Income Tax ◽

Natural Experiments ◽

Corporate Tax ◽

Personal Taxes ◽

Ex Post ◽

Tax Payers

AbstractWe use nearly 500 shifts in statutory corporate and personal income tax rates as natural experiments to assess the effect of corporate and personal taxes on capital structure. We find both corporate and personal income taxes to be significant determinants of capital structure. Based on ex post observed summary statistics, across Organisation for Economic Co-Operation and Development (OECD) countries, taxes appear to be as important as other traditional variables in explaining capital structure choices. The results are stronger among corporate tax payers, dividend payers, and companies that are more likely to have an individual as the marginal investor.

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