AN APPROXIMATION FOR THE OPTIMAL LINEAR INCOME TAX RATE

2009 ◽  
Vol 48 (3) ◽  
pp. 224-236 ◽  
Author(s):  
JOHN CREEDY
Keyword(s):  
Income Tax ◽  
Tax Rate ◽  
Optimal Linear

Poverty and Savings: Optimal Taxes with Endogenous Discount Factors

2019 ◽  
Vol 47 (5) ◽  
pp. 828-863
Author(s):  
Pier-André Bouchard St-Amant ◽  
Louis Perrault
Keyword(s):  
Income Tax ◽  
Labor Income ◽  
Tax Rate ◽  
Discount Factors ◽  
Present Bias ◽  
Lower Weight ◽  
Recent Developments ◽  
Optimal Linear ◽  
Future Consumption ◽  
Optimal Taxes

Following recent developments linking poverty to present-bias behavior, we conduct an optimal linear taxation analysis where some individuals (called “behaviorals”) have a discount factor that is a function of their disposable income. In the model, endogenous discount factors imply (1) that taxing labor decreases the valuation of savings and (2) that subsidies on savings mitigate for a lower weight being given to future consumption. We perform simulations where the number of behavioral individuals increases and find that resources raised through labor taxation are used to finance saving subsidies rather than an increase of transfers. The prevalence of behaviorals leads to an increase in the labor income tax rate.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

scholarly journals Taxing Capital? Not a Bad Idea After All!

2009 ◽  
Vol 99 (1) ◽  
pp. 25-48 ◽  
Author(s):  
Juan Carlos Conesa ◽  
Sagiri Kitao ◽  
Dirk Krueger
Keyword(s):  
Income Tax ◽  
Labor Income ◽  
Income Shocks ◽  
Capital Income ◽  
Overlapping Generations Model ◽  
Cycle Structure ◽  
Tax Rate ◽  
Average Household Income ◽  
Optimal Capital

We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is significantly positive at 36 percent. The optimal progressive labor income tax is, roughly, a flat tax of 23 percent with a deduction of $7,200 (relative to average household income of $42,000). The high optimal capital income tax is mainly driven by the life-cycle structure of the model, whereas the optimal progressivity of the labor income tax is attributable to the insurance and redistribution role of the tax system. (JEL E13, H21, H24, H25)

scholarly journals Victory Tax: A Holistic Income Tax System

Entropy ◽  
2021 ◽  
Vol 23 (11) ◽  
pp. 1492
Author(s):  
Donald J. Jacobs
Keyword(s):  
Income Tax ◽  
Free Market ◽  
Poverty Line ◽  
The United States ◽  
Effective Tax Rate ◽  
Tax System ◽  
Tax Rate ◽  
Single Tax ◽  
Government Transfer ◽  
Log Normal

How can an income tax system be designed to exploit human nature and a free market to create a poverty free society, while balancing budgets without disproportional tax burdens? Such a tax system, with universal character, is deduced from the following guiding principles: (1) a single tax rate applies to all income types and levels; (2) the tax rate adjusts to satisfy budget projections; (3) government transfer only supplements the income of households with self-generated income below the poverty line; (4) deductions for basic living expenses, itemized investments and capital losses are allowed; (5) deductions cannot be applied to government transfer. A general framework emerges with three parameters that determine a minimum allowed tax deduction, a maximum allowed itemized deduction, and a maximum deduction defined by income percentage. An income distribution that mimics the United States, and a series of log-normal distributions are considered to quantitatively compare detailed characteristics of this tax system to progressive and flat tax systems. To minimize government dependency while maximizing after-tax income, the effective tax rate (ETR) as a function of income percentile takes the shape of the letter, V, inspiring the name victory tax, where the middle class has the lowest ETR.

scholarly journals MODERN TRANSFORMATION AND PROBLEMATIC ASPECTS OF TAXATION OF THE FINANCIAL RESULTS OF INSURERS IN UKRAINE

2017 ◽  
pp. 19-33 ◽  
Author(s):  
Oleksandr KVASOVSKYI ◽  
Mykola STETSKO
Keyword(s):  
Financial Performance ◽  
Income Tax ◽  
Legal Framework ◽  
Insurance Companies ◽  
Pension Insurance ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Direct Taxation ◽  
Legal Provisions ◽  
Before And After

Introduction. Today the problem of establishing an effective taxation technology of domestic insurers' financial results has not been finally solved. That technology would ensure achieving fiscal objectives of budget revenues improvement and the implementation of the regulatory capacity of the tax regime to enhance the development of the insurance market in Ukraine on the principles of transparency and legitimacy of the business. Purpose. The purpose of the article is critical analysis of recent transformations in the method of taxation of the financial performance of insurance companies in Ukraine, assessment of their impact on the dynamics of national insurance organizations budget revenues in recent years, a clear identification of legal conflicts and problematic aspects of the insurers' profit and income tax collecting procedures with a view to their elimination. Results. The article looks into the major differences in innovation and methodological approaches to taxation of the financial performance of domestic insurers before and after January 1, 2015. The work characterizes the dynamics of absolute and relative indicators of income tax on profits from insurance companies to the consolidated budget of Ukraine in 2012-2016 (compared to banks) from a position of impact of changes in tax regime for insurers. The research also revealed a number of legal contradictions and problematic issues in the current procedure for determining taxable profits of insurance organizations in the consideration of tax differences, calculating the income tax of taxable item in the neglecting of the revenues and transmission of insurance payments (contributions, premiums) for reinsurance operations and so on. Conclusion. A number of recommendations to improve the technology of direct taxation of insurance companies' corporate income tax and indirect taxes on insurance premiums, namely: clear distinction of mentioned fiscal duties; revision of the legal framework regarding the collection of insurers’ income tax (detailed definition of the list of costs for the calculation of financial results of the insurer before tax, establishing a list and approval of scientifically based methods of calculating insurance reserves for the calculation of taxable income, specification of legal provisions regarding taxation of insurance companies that specialize in life insurance, and longterm pension insurance); the introduction of preferential tax treatment of small profit insurance organizations through the establishment of progressive tax rates; gradual reduction of the effective tax rate for insurance companies.

scholarly journals PROBABILITY MODEL OF POVERTY CALCULATION SUBJECT TO DIFFERENT FORMS OF INCOME TAXATION

2020 ◽  
Vol 2020 (4) ◽  
pp. 101-111
Author(s):  
Andrej Vyacheslavovich Mikheev
Keyword(s):  
Income Tax ◽  
Probability Model ◽  
Single Stage ◽  
Income Taxation ◽  
Tax Rates ◽  
Total Income ◽  
Tax Rate ◽  
Low Incomes ◽  
The Russian Federation ◽  
Tax Systems

The article highlights a probabilistic model constructed for calculating the number of poor and the total income tax levied on all taxpayers under different income tax systems. There is considered the proportional income tax system adopted in the Russian Federation, as well as single-stage systems with both fixed and variable tax rates, in which individuals with low incomes are exempted from income tax. For these tax systems there have been found the dependences of the expected value of the number of the poor and the total income tax on the tax rate, tax-free minimum, and also on the laws of probabilities distribution of total income and the living wage of an individual. A numerical simulation of the found dependences was carried out. The conditions under which the abolition of income tax for individuals with low incomes reduces the number of poor were determined. Mathematical criteria are formulated with the help of which it is possible to assess the feasibility of moving from a proportional system to single-stage income tax systems.

scholarly journals PENGARUH TARIF PAJAK PENGHASILAN, MEKANISME BONUS, DAN TUNNELING INCENTIVES TERHADAP PERGESERAN LABA DALAM MELAKUKAN TRANSFER PRICING DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI VARIABEL MODERASI

2019 ◽  
Vol 4 (2) ◽  
pp. 141
Author(s):  
Vinola Herawaty ◽  
Anne Anne
Keyword(s):  
Corporate Governance ◽  
Income Tax ◽  
Audit Quality ◽  
Transfer Pricing ◽  
Income Shifting ◽  
Manufacturing Companies ◽  
Tax Rate ◽  
Independent Variables ◽  
Good Corporate Governance ◽  
Bonus Plan

<p><em>This study aims to examine the effect of income tax rates, bonus plan and tunneling incentives as instruments in detecting income shifting with transfer pricing with moderate good corporate governance. The independent variables in this research are income tax rate, bonus plan and tunneling incentives as well as leverage and firm size as control variables. Good corporate governance mechanism that has been used in this research is audit quality regarding to auditor reputation.The sample was taken by purposive sampling method consisting of 176 manufacturing companies of consumer goods industry sector listed in Indonesia Stock Exchange which have reported complete financial report in period 2013-2016. Test of hypothesis was using SPSS 23 application.The results show that good corporate governance has weaken positive significant for bonus plan and tunneling incentives in detecting income shifting in transfer pricing. Meanwhile, other independent variables income tax rate has no significant effect. </em></p>

scholarly journals Evaluation the impact of the personal income tax reform in the Czech Republic in 2021 on effective tax rate and tax progressivity

2021 ◽  
Vol 7 (2) ◽  
pp. 134-145
Author(s):  
M. Krajňák ◽  
Keyword(s):  
Income Tax ◽  
Tax Reform ◽  
Personal Income ◽  
Personal Income Tax ◽  
Effective Tax Rate ◽  
Tax Base ◽  
Tax Rate ◽  
Tax Progressivity ◽  
The Impact ◽  
Income Tax Reform

Legislation governing personal income taxation is often subject to changes. A significant personal income tax reform was carried out in the Czech Republic in 2021. The reform implements a progressive tax rate, changes the way the tax base is determined, and increases the tax relief for the taxpayer. The aim of the article is to evaluate the impact of the personal income tax reform on the effective tax rate and tax progressivity. To that end, methods of regression analysis have been used. The source of information for analysis was the data published by the Czech Statistical Office. It was found that in 2021, in comparison with 2020, the tax burden represented in this study by the effective tax rate, in all cases became lower, approximately by 5%. The main reason for this decline is the adjustment of the method of construction of the tax base, which, for the first time in the history of the Income Tax Act, is gross wages. Until the end of 2020, the tax base was a super-gross wage, or the gross wage increased by social security contribution borne by the employer at his costs. The second factor that reduces the tax burden is a CZK 3,000 increase in the deduction per taxpayer per year. This fact increases the degree of tax progressivity, as confirmed by the results of the progressivity analysis and the regression analysis. The changes that have taken place in the personal income tax this year have a positive impact on the taxpayer, but from the point of view of the state, this reform has reduced the state budget revenues.

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