The Changing Impact of the Alternative Minimum Tax on Horizontal Equity

2008 ◽  
Vol 8 (1) ◽  
pp. 39-65 ◽  
Author(s):  
Peter J. Westort
Keyword(s):  
Low Income ◽  
Income Tax ◽  
Horizontal Equity ◽  
Lower Income ◽  
Tax System ◽  
Rank Reversal ◽  
Income Groups ◽  
Federal Income Tax ◽  
The Impact ◽  
Income Taxpayers

While prior research (Anderson 1985, 1988) indicates that the Alternative Minimum Tax (AMT) increases the fairness, or horizontal equity (HE), of the federal income tax system, changes in tax laws and the general inability of the AMT system to account for inflation raise serious questions about whether the AMT continues to increase fairness. Burman et al. (2002) observe that the reason many more taxpayers are now subject to the AMT is because of the increasing divergence of the regular tax and the AMT. This divergence subjects more lower-income taxpayers to the AMT, thus resulting in higher total tax liability. Using individual income tax return data for 1992, 1995, and 2000, and both dispersion-based and rank reversal-based measures, this study observes that the AMT still increases HE in many upper income groups, but decreases HE in many lower income groups. Moreover, overall measures of HE indicate that the AMT has a net decreasing effect on HE. There are two implications to these findings. First, it can no longer be assumed that the AMT uniformly improves HE. Second, the AMT generally continues to achieve its intended result at the upper income levels. This result suggests that regulators and legislators wishing to improve the AMT system need to address the causes of low-income taxpayers being subject to the AMT while maintaining the impact on upper income taxpayers.

scholarly journals THE CASE FOR OVER-WITHHOLDING FEDERAL INCOME TAX: BENEFITS TO LOW-INCOME TAXPAYERS

2021 ◽  
Vol 12 (2) ◽  
Author(s):  
Susannah Kroeber
Keyword(s):  
Low Income ◽  
Income Tax ◽  
Tax Compliance ◽  
Single Source ◽  
Multiple Sources ◽  
Marginal Rate ◽  
Federal Income Tax ◽  
Tax Benefits ◽  
The Government ◽  
Income Taxpayers

The W-4 tax withholding form has been used by individual taxpayers for decades to calculate their tax withholdings. It is based, however, on the faulty assumption that most U.S. workers have a single source of income. This assumption has caused millions of taxpayers to incur unnecessary tax debt. The formula for calculating federal income tax withholding for employees routinely under-withholds for low-income workers who have multiple sources of income because, without substantial documentation and calculation by the employee, employers withhold as if they are the employee’s single source of income. Taxpayers may therefore see their income tax withheld at too low a marginal rate, oftentimes zero percent, and can have significant balances due on short notice at the end of the tax year.This Note documents that reality and proposes a solution. It proposes a reconception of the Form W-4 and the withholding formula through the lens of low-income filers and aims for a policy of over-withholding from those filers in order to reduce surprise tax due and related penalties. The proposed solution removes the bias towards achieving a “zero refund” from the form design by eliminating the tax-free threshold—for most filers, the equivalent of their standard deduction—from the withholding scheme. As discussed in the Note, the proposed policy would also have the benefit of increasing tax compliance, minimizing bureaucratic burdens, and providing a revenue-neutral solution for the government. This Note further suggests an extension of the proposed policy to provide a much-needed savings mechanism for low-income filers.

scholarly journals Inequality, policy polarization and the income gap in turnout

2021 ◽  
pp. 135406882110119
Author(s):  
Matthew Polacko
Keyword(s):  
Income Inequality ◽  
Low Income ◽  
Party Systems ◽  
Individual Level ◽  
Income Gap ◽  
Income Groups ◽  
Logistic Regressions ◽  
Negative Impacts ◽  
The Impact ◽  
The Relationship

Previous research into the relationship between income inequality and turnout inequality has produced mixed results, as consensus is lacking whether inequality reduces turnout for all income groups, low-income earners, or no one. Therefore, this paper builds on this literature by introducing supply-side logic, through the first individual-level test of the impact that income inequality (moderated by policy manifesto positions) has on turnout. It does so through multilevel logistic regressions utilizing mixed effects, on a sample of 30 advanced democracies in 102 elections from 1996 to 2016. It finds that higher levels of income inequality significantly reduce turnout and widen the turnout gap between rich and poor. However, it also finds that when party systems are more polarized, low-income earners are mobilized the greatest extent coupled with higher inequality, resulting in a significantly reduced income gap in turnout. The findings magnify the negative impacts income inequality can exert on political behavior and contribute to the study of policy offerings as a key moderating mechanism in the relationship.

scholarly journals Does the Tax System Reduce Tax Evasion in Light of the Governance Mechanisms? Evidence From Jordan

2021 ◽  
Vol 12 (2) ◽  
pp. 99
Author(s):  
Ashraf Bataineh
Keyword(s):  
Tax Evasion ◽  
Income Tax ◽  
Social Impact ◽  
Positive Impact ◽  
Governance Mechanisms ◽  
Official Statistics ◽  
Tax System ◽  
Study Results ◽  
The Impact ◽  
Awareness Level

This study aims to measure the impact of tax system elements on reducing the tax evasion, in light of the governance mechanisms in Jordan. The study sample consists of (140) tax auditors at the Jordanian Income tax and sales department, and to achieve the study objectives the researcher designed a questionnaire and distributed it on the study sample members. Study results show that elements of the tax system (tax legislations, tax administration, and Taxpayer) have a positive impact on reducing the tax evasion, in light of governance mechanisms. study recommends the need to raise the tax awareness level among members of the Taxpayer, work to reduce the continuation of making adjustments on tax laws and legislation, and give a sufficient period of time to ensure that desired economic and social impact being achieved from these adjustments, with the need to announce the official statistics of tax evasion’s figures and ratios, because the unofficial statistics on tax evasion have been tarnished by some exaggeration where work should concentrate on increasing penalties of tax evaders.

scholarly journals Opportunities for Simplification in the Personal Income Tax Systems of the Visegrad Countries

2020 ◽  
Vol 65 (4) ◽  
pp. 531-553
Author(s):  
Éva Bonifert Szabóné
Keyword(s):  
Income Tax ◽  
Policy Instruments ◽  
Degree Of Approximation ◽  
Personal Income ◽  
Tax Burden ◽  
Personal Income Tax ◽  
It Use ◽  
Tax System ◽  
Tax Systems ◽  
The Impact

Due to the numerous factors that can influence the impact of the tax system and redistribution, there is no single correct answer to the question of which composition of economic policy instruments needs to be applied to achieve a desired redistributive effect. The general aim of the study is to investigate in relation to the quantifiable parameters of income tax systems, whether the consideration of the aspects of fairness and justice does have an excessively negative effect on the simplicity of tax systems. The study investigates the possibilities of simplifying the personal income tax system’s composition in some Central and Eastern European countries, while tax burden curves of the system remain as constant as possible. To this end, the study sets up a theoretical, simplified tax model, the parameters of which are determined by a computer program, in order to generate tax burden curves corresponding most closely to the curves of the real tax system. Based on the analysis, it can be established that the theoretical system – in some cases with restrictions – provides a good approximation to the tax burden curves of the investigated countries. The chosen simple model has a good degree of approximation to a real system that does not have significant breakpoints in its tax burden curves, nor does it use a taxation method that fundamentally modifies the system (e.g., splitting). Practical examples help to understand that a complex personal income tax system in a given country is not necessarily the only possible solution to achieve a given tax burden curve, the function may be reproduced with a good approximation constructed from simpler basic elements.

scholarly journals THE IMPACT OF TAX POLICY ON ECONOMIC GROWTH, INCOME DISTRIBUTION, AND ALLOCATION OF TAXES

2006 ◽  
Vol 23 (2) ◽  
pp. 28-52 ◽  
Author(s):  
James D. Gwartney ◽  
Robert A. Lawson
Keyword(s):  
Economic Growth ◽  
Income Distribution ◽  
Income Tax ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Income Groups ◽  
Marginal Tax Rates ◽  
Tax Changes ◽  
The Impact ◽  
Distribution Of Income

Using a sample of seventy-seven countries, this paper focuses on marginal tax rates and the income thresholds at which they apply to examine how the tax changes of the 1980s and 1990s have influenced economic growth, the distribution of income, and the share of taxes paid by various income groups. Many countries substantially reduced their highest marginal rates during the 1985-1995 period. The findings indicate that countries that reduced their highest marginal rates grew more rapidly than those that maintained high marginal rates. At the same time, the income distribution in several of the tax cutting countries became more unequal while there was little change or even a reduction in income inequality in most countries that maintained high marginal rates. Finally, the evidence suggests that there was a shift in the payment of the personal income tax away from those with low and middle incomes and toward those with the highest incomes.

Tax Expenditures and the Tax Reform Act of 1969 in the United States

2022 ◽  
pp. 1-26
Author(s):  
Seiichiro Mozumi
Keyword(s):  
United States ◽  
Income Tax ◽  
Public Perception ◽  
Tax Reform ◽  
The United States ◽  
Tax Revenue ◽  
Tax System ◽  
Federal Income Tax ◽  
Federal Taxation ◽  
The Government

Abstract In the United States, tax favoritism—an approach that has weakened the extractive capacity of the federal government by providing tax loopholes and preferences for taxpayers—has remained since the 1930s. It has consumed the amount of tax revenue the government can spend and therefore weakened the possibility of the redistribution of fiscal resources. It has also made the federal tax system complicated and inequitable, resulting in undermining taxpayer consent. Therefore, since the 1930s, a tax reform to create a simple, fair, and equitable federal income tax system with the capacity to raise revenue has been long overdue. Many scholars have evaluated the Tax Reform Act of 1969 (TRA69), which Richard M. Nixon signed into law on December 30, 1969, as one of the most successful steps toward accomplishing this goal. This article demonstrates that TRA69 left tax favoritism in the United States. Furthermore, it points out that TRA69 turned taxpayers against the idea of federal taxation, a shift in public perception that greatly impacted tax reform in the years to follow.

scholarly journals Nonlinear Dynamics in the Finance-Inequality Nexus in China-CHNS Data

2019 ◽  
Vol 11 (1) ◽  
pp. 191 ◽  
Author(s):  
Mohammad Masudur Rahman ◽  
Guan Fuquan ◽  
Laila Arjuman Ara
Keyword(s):  
Financial Development ◽  
Low Income ◽  
Income Group ◽  
High Income Group ◽  
Middle Income ◽  
Linear Effect ◽  
Quantile Regression Model ◽  
Income Groups ◽  
Using Data ◽  
The Impact

This paper empirically investigates the effects of financial development on incomes of Chinese residents particularly within various income groups using data from six provinces by applying the Quantile Regression model. The Greenwood and Jovanovich hypothesis that illustrates the inverted U shaped relationship between financial development and income inequality is tested. This empirical study demonstrates that financial development has a positive but non-linear effect on the annual income of individuals from various income groups at different quantiles. The effect is an inverted U or Kuznets effect indicating an increase at first and then a drop. As for the distribution of the impact on various income groups, the low-income group is under the most dominant influence followed by the high-income group with the middle-income groups receiving relatively smaller influence. Findings indicate that promoting balanced financial development would help to ease the income gap between Chinese residents.

scholarly journals Impact of Cyclone on Livelihood Pattern in the South Western Coastal Region of Bangladesh: Pirojpur

2020 ◽  
Vol 13 (1) ◽  
pp. 30
Author(s):  
Dilara Nasrin ◽  
Mahmuda Binte Latif ◽  
Shamim Al Mamun ◽  
Reyad Hossain Arif ◽  
Muliadi Muliadi
Keyword(s):  
Low Income ◽  
Crop Production ◽  
Saline Water ◽  
Coastal Region ◽  
Secondary Data ◽  
Food Habit ◽  
Primary Data ◽  
Cultivated Land ◽  
Income Groups ◽  
The Impact

This research was carried out to assess the impact of cyclone on livelihood pattern in Pirojpur district, Bangladesh during January to June, 2017. The study was both qualitative and quantitative type. The primary data were collected using randomly sampling method (42+42+42=126 respondents) from Tushkhali, Bhitabaria and Pattashi villages of Pirojpur district. The secondary data were collected from different journals, articles, books, official documents, thesis papers and also daily newspapers etc. From the study it was observed that monthly income of  middle (4001-8000 tk) and high (8001-above tk) income groups ware decreased by 5% and 0.92% respectively while low income people (1-4000 tk) was increased due to decrease of production after Sidr. On the other hand, expenditure ability of low and middle income groups was decreased. Sidr has created a great impact on human health, livestock, fisheries, food habit, crop production and occupation pattern of the affected people. Respondent’s houses were damaged partially (66.78%), 33.22% completely and cultivated land 28.57 % completely by Sidr in study area. Respondents of the study area said that the production of rice (8%), chili (12%), and vegetables (11%) were reduced due to saline water entrance into the crop field after Sidr. Affected people were migrated (temporary 23.10%, local 25% and internal 26.10%) from Pirojpur to Dhaka (53%), Pirojpur to other places (47%) on the post Sidr due to loss of houses, shelters, cultivated land and lack of job opportunity. Among all factors of temporary migration, water logging was the first reason of migrating people of the study area. 

scholarly journals ПОДХОДЫ К ВЫБОРУ ПОЛИТИКИ НАЛОГООБЛОЖЕНИЯ В КОНТЕКСТЕ РЫНОЧНЫХ СТИМУЛОВ: ПРИМЕР АРМЕНИИ

2020 ◽  
Vol 2 (30) ◽  
pp. 4-13
Author(s):  
Ани Аветисян ◽  
Keyword(s):  
Income Inequality ◽  
Income Tax ◽  
National Income ◽  
Social Benefits ◽  
Tax Rates ◽  
State Budget ◽  
Tax System ◽  
Market Incentives ◽  
Before And After ◽  
The Impact

Features of progressive, proportional and regressive types of taxation in the framework of the national income redistribution system are considered. The paper analyzes the literature devoted to the study of the impact of tax types on market incentives. The influence of the system of deductions and social benefits on the level of income inequality of the population and revenues to the state budget is considered. The article presents the income tax system in Armenia, statistics on the level of employment by industry, wages and taxes paid before and after the reform of the transition to the proportional tax scale, which came into force on January 1, 2020. Examples of a number of countries that use differentiation of tax rates depending on marital status are given. The analysis concluded that the weakness of economic regulatory institutions is a more significant factor than the level of tax rates

Sign in / Sign up

Export Citation Format

Share Document