United States Taxes and Tax Policy supplements and complements the theoretical material on taxes found in public finance texts using a combination of institutional, theoretical and empirical information. By adding flesh to theoretical bones, this textbook provides insight into the behaviour of individuals in both the private and public sectors. Specifically, the economic effects of taxes and tax policy are stressed and, as a result, students will gain an appreciation and understanding of how tax policy actually affects (...) the economy. For example, where many texts typically stop with a rather pristine treatment of the income and substitution effects of a tax, this book goes further by examining econometric studies of the supply of labour, and the relationship of this work to taxes, the Laffer curve, and the role and magnitude of the underground economy. Using this approach, Professor Davies brings life to what can be a dull subject. (shrink)

Environmental pollution and climate change have been considered the main environmental challenges affecting the world’s ecosystem, including that of South Africa. They cause poverty, land degradation, and health hazards. One of the leading causes and contributing factors of environmental pollution and climate change is carbon emissions into the atmosphere. As a way to curb these emissions, Carbon tax policy has been introduced in various countries, including South Africa. In 2019, a Carbon tax was introduced to assist South Africa in (...) delivering on the commitments made in the Paris Agreement in 2015. If the policy is effectively applied, it will raise revenues while reducing carbon dioxide emissions. Before and after introducing the Carbon tax policy in South Africa, there has been debate and discussion on its impact on the environment, economy, and society. Based on the debate and discussion, it has been observed that more attention is paid to the economic implications and benefits of the tax on South Africa than the ethical implications. Thus, this paper aims to contribute to the ongoing debate and discussion by ethically evaluating the Carbon tax policy in South Africa. (shrink)

‘Marx on tax’ as an effective antidote to inequality is an overlooked theme within his own output, but also for our own time. Marx theorising on tax is seen even by pre-eminent Marxists as an empty box, but Marx and Engels in fact had plenty to say about tax. Their coverage embraces progressive taxes, both on capital and income, a strong preference for direct over indirect taxation, inheritance tax, land-value tax, taxes on financial transactions, and state finances around the world. (...) Tax also provides the battleground for a rare sight of Marx as campaigning activist, in 1848, matched in the same period by close ally Wilhelm Wolff. The tax policies of Marx and Engels have been neglected because they are primarily to be found in their journalism and letters. They are no anachronistic curiosity but perfectly applicable to the income and wealth inequalities of our own era. (shrink)

The issue how to reduce of tax evasion is widely discussed in the literature. A public authority may affect the behavior of taxpayers, not only through economic factors, but also by strengthen fiscal discipline. In this process especially role play such issues as tax morale, tax mentality and perceived tax justice. The purpose of the study was to identify groups of taxpayers with similar attitudes towards taxes and similar tax behaviors. Cluster analysis elicited four types of tax payers: Intrinsic Tax (...) Payer, External Tax Payer, Intrinsic Tax Evader, External Tax Evader. In the study the most common were the first two types of taxpayers. Elicited types correspond with motivational tax postures identified by Braithwaite and Torgler. The conclusions sum up the key issues discussed, policy implications and the limitation of the analysis. (shrink)

This study examines the conditions under which local social environments are likely to influence corporate tax behavior. Using a social capital index at the county level, we find that on average, social capital reduces firms’ aggressive tax avoidance behavior. The impact of social capital on corporate tax avoidance is weaker when managers are under excessive pressure to meet earnings targets, during the periods of financial constraints, and when managers are incentivized to undertake risk. We further find that corporate tax avoidance (...) activities engaged by firms headquartered in high-social-capital counties tend to be less value-increasing, indicating that potential social sanctions in these areas may reduce the benefits of tax avoidance activities accrue to firms. However, the negative impact of tax avoidance on firm value in high-social-capital counties tends to be lower for firms with strong corporate governance, which suggests that managers in well-governed firms can better exploit tax avoidance opportunities. Overall, our evidence is consistent with our conjecture that although the local social environments have a significant influence on corporate tax behavior, this influence is fragile in the presence of excessive earnings pressure, financial constraints, and equity risk incentives. (shrink)

This article analogizes the state, in its role as tax collector, to that of an investor, or to be more precise, that of a residual claimant on the earnings of all of the people and firms subject to the taxing power of the state. The relationship between modern democracy and its citizens would be strengthened if this analogy were more widely acknowledged because it recognizes citizen-taxpayers as contracting partners with the state. Unlike other libertarian conceptions of the state's taxing authority, (...) the framework developed here does not jeopardize the state's ability to collect the revenues it needs to provide for the protections of its citizens. The state-as-investor framework developed in this Article leads to a number of tax policy improvements. The framework suggests limits on the government's ability to change people's tax status after they have already embarked on careers and made the sunken, non-diversifiable investments in human capital that such career training requires. The framework advanced here also suggests that people should be able to make a once-in-a lifetime payment in lieu of taxes to the state in order to discharge their tax liability. This approach articulated here also seems superior to the utopian suggestion offered by Ayn Rand that taxation be voluntary, as well as to the unrealistic suggestion made by Nozick that income taxes are violative of man's natural rights. (shrink)

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. (shrink)

Developing countries often rely on consumption taxes, because these are broad, easy to administer, and harder to evade. However, the taxation system becomes inherently regressive. To counter this problem of the regressive nature of consumption taxes, there is a temptation among policymakers to address equity concerns through a multiplicity of rates, making the consumption tax system complex. Here, complexity is considered the by-product, or companion, to pursuing goals of equity. Complex tax systems, however, pose a different problem relating to equity. (...) Assuming a minimum fixed cost of compliance imposed by a complex tax system, smaller firms and individuals face a much higher cost of compliance relative to larger firms and richer individuals. Oligarchic sectors dominated by a few large firms also find it easier to organize and lobby to get favorable rates compared to competitive sectors with small firms. Though complexity is considered a by-product of several equity-enhancing measures, the Indian experience with its Goods and Services Tax reform serves demonstrates the opposite, that there is a trade-off between equity and complexity. (shrink)

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In this article I maintain that a progressive and leftist carbon tax should be revenue-neutral through a dual policy package: first, it should use some revenues to offset price increases for the poor and middle classes; second, it should use the remaining part of revenues to lower taxes on labour income (both employed and self-employed income) for those below a middle-income threshold. I will briefly examine three reasons why such a revenue-neutral and dual-package carbon tax (RN-DP-CT) could (and should) (...) become central in the political agenda of the European Left – even though much of what I will suggest can reasonably hold also with respect to other countries. First, the tax wage on labour in the euro area is one of the highest in the world. Second, the revenue-neutral and dual policy package carbon tax will tax more capital that yields income without a proportional increase in labour demand, rather than capital that creates new job opportunities. Third, we live in societies that are highly unequal, hence I see no moral reason why a carbon tax reform should not aim, among other things, to take wealth away from the richest. (shrink)

Ideal carbon tax policy is internationally coordinated, fully internalizes externalities, redistributes revenues to those harmed, and is politically acceptable, generating predictable market signals. Since nonideal circumstances rarely allow all these conditions to be met, moral issues arise. This paper surveys some of the work in moral philosophy responding to several of these issues. First, it discusses the moral drivers for estimates of the social cost of carbon. Second, it explains how national self-interest can block climate action and suggests international (...) policies—carbon border tax adjustments and carbon clubs—that can help address these concerns. Third, it introduces some of the social science literature about the political acceptability of carbon taxes before addressing a couple common public concerns about carbon taxes. Finally, it introduces four carbon revenue usage options, arguing that redistributive and climate compensation measures are most morally justified. [Open access]. (shrink)

The political environment has a significant impact on the sustainable development of enterprises. This manuscript aims to investigate the effect of policy uncertainty and official social capital on enterprises’ effective tax rate due to the change of officials. Based on the panel data from the Chinese Industrial Enterprise Database from 1998 to 2009, it is shown that the policy uncertainty caused by the change of local government officials significantly increases the ETR of enterprises. Meanwhile, municipal officials who have (...) social ties with provincial officials in their province also tend to raise the ETR of industrial enterprises, and this tendency is more evident when the officials take office. Further research shows that the effects vary in many aspects for policy uncertainty and social capital on the ETR of enterprises. The findings of this manuscript provide support for a deeper understanding of the change in local government fiscal policies and give suggestions to strengthen political environmental governance for the sustainable development of enterprises. (shrink)

The concept of a Liberal Proviso introduced in “Neutrality and Perfectionism in Public Health” provides some ideas on how to limit excessive or unjustified interventions from...

This paper proposes a novel use of tax policy to address one of the most pressing issues arising from economic globalization and international migration, that of “brain drain” – in particular, the migration of certain skilled and highly trained or educated professionals from less and least developed countries to wealthy “western” countries. This problem is perhaps most pressing in relation to doctors, nurses, and other medical professionals, but exists also for teachers, lawyers, economists, engineers, and other highly skilled or (...) trained professionals. While there have been other proposals in the past to use tax policy to address brain drain (most famously versions of the so-called “Bhagwati Tax”, a form of exit tax), in this paper I provide an account of and justification for using tax credits, modeled loosely on the foreign tax credits U.S. citizens receive in certain situations for taxes paid in other countries. My proposal avoids several of the pitfalls of other methods of using tax policy to ameliorate the harms of brain drain, as it does not subject people from the developing world to potentially onerous double taxation, and does not depend on sophisticated tax collection capabilities within developing countries, capabilities which are often lacking. Additionally, my proposal also leads to fewer morally problematic restrictions on the liberty of citizens of less and least developed countries than do non-taxed based alternative proposals, such as temporary bans on migration. While the proposal cannot hope to completely solve the problems that arise in relation to brain drain – no approach can do this – it does provide a straightforward way to ameliorate the problems that arise from it without placing significant financial or liberty burdens on already less advantaged people from the developing world. -/- (This paper may be downloaded for free from the link to my SSRN page below). (shrink)

While the importance of fostering individual taxpayers’ (hereafter taxpayers) trust in government to encourage tax compliance is widely acknowledged, how policy actions can increase trust in government remains unclear. Thus, the main purpose of our research is to see whether policy actions that signal government benevolence during a crisis can quickly increase trust in government, and its positive implications for tax compliance intentions. Another goal of our research is to see whether such a quick change of trust is (...) driven by emotions. To test this, we use the British COVID-19 Self-Employment Income Support Scheme (hereafter SEISS) as a natural experiment. Right after the SEISS was launched to the British public, we recruited a sample of 500 British self-employed taxpayers via Prolific. Our results suggest that receiving (vs. not receiving) government support increases trust in government and enhances tax compliance intentions. In addition, trust in government mediates the positive impact of receiving (vs. not receiving) government support on tax compliance intentions. More important, our results suggest that policy actions that signal government benevolence during a crisis can increase trust in government quickly because it is driven by taxpayers’ emotions such as gratitude. These results have important implications for governments to efficiently deal with the sharp rise in public debts caused by the COVID-19 pandemic. (shrink)

International tax competition undermines states’ capacity for redistributive taxation. It is thus problematic from the point of view of both cosmopolitan and internationalist theories of justice. This article examines the proposal of a fiscal policy constraint that prohibits tax policies if they are strategically motivated and harmful to effective fiscal self-determination internationally. I argue that we should opt for a more robust, preference-independent mechanism to prevent harmful tax competition instead. States should, as a matter of justice, accept global minimum (...) tax rates on mobile tax bases. (shrink)

The concept of 'sustainable development' as used by the Brundtland Commission was meant to separate environmental policy from distributional conflicts. Increases in income sometimes are beneficial for the environment, but higher incomes have meant higher emissions of greenhouse gases, and higher rates of genetic erosion. In the aftermath of the Rio conference of June 1992, this article analyses some unavoidable links between distributional conflicts and environmental policy. Often, environmental movements have tried to keep environmental resources and services outside (...) the market, but there are now attempts to establish property rights on, and to give money values to environmental resources and services, such as agricultural genetic resources and the CO2 absorption facility provided by the oceans and new vegetation. European 'green' proposals to impose an 'eco-tax', and proposals from India to create a world market for CO2 emission permits are considered. The issue raised by the growing Third World agroecology movement, of payment of 'farmers' rights' for in situ agricultural biodiversity is discussed. The article includes a short discussion of the North American free trade agreement between Mexico and the USA, in so far as it involves so-called 'ecological dumping', i.e. trading at values which do not include environmental costs. In the last sections, the article asks how prices in ecologically-extended markets would be formed, how much such prices will depend on distribution, and how much such payments would change distribution of income. Environmental movements of the Poor are faced with the dilemma of keeping environmental resources and services out of the market, or else asking for property rights to be placed on them. (shrink)

Reform of the federal income tax system has become a perennial item on the domestic policy agenda of the United States, although there is considerable uncertainty over specifics. Indeed the recent report of the President's Advisory Panel on Federal Tax Reform recommended not one but two divergent policy directions. In Fundamental Tax Reform, top experts in tax policy discuss a wide range of issues raised by the prospect of significant tax reform, identifying the most critical questions and (...) considering whether the answers are known, unknown--or unknowable. The debates over tax reform usually concern the advantages and disadvantages of income-based taxation as opposed to any of the several alternative forms of consumption-based taxation. The book opens with chapters that discuss the strengths, weaknesses, and political feasibility of these options. Other chapters consider the effect of tax reform on businesses, especially their investment behavior, and include a discussion of possible problems in any transition to a consumption-based tax; international taxation issues arising in an era of globalization; and individual behavioral response to tax reform, including a view of the topic from the perspective of the relatively new field of behavioral economics. ContributorsRosanne Altshuler, Alan J. Auerbach, John W. Diamond, Harry Grubert, Arnold C. Harberger, Kevin A. Hassett, Thomas J. Kniesner, Laurence J. Kotlikoff, Edward J. McCaffery, Kathryn Newmark, David Rapson, Daniel Shaviro, Joel Slemrod, James P. Ziliak, George R. ZodrowDiscussants James Alm, Henry J. Aaron, Charles L. Ballard, Leonard E. Burman, Robert S. Chirinko, Robert D. Dietz, Malcolm Gillis, Roger H. Gordon, Jane G. Gravelle, Timothy S. Gunning, James M. Poterba, Thomas S. Neubig, Alan Viard, George Yin John W. Diamond is Edward and Hermena Kelly Fellow in Tax Policy and Adjunct Professor of Economics at the Baker Institute for Public Policy, Rice University. George R. Zodrow is Professor of Economics and Rice Scholar at the Baker Institute and International Research Fellow at the Centre for Business Taxation, Oxford University. (shrink)

In a capitalist economy, taxes are the most important instrument by which the political system puts into practice a conception of economic and distributive justice. Taxes arouse strong passions, fueled not only by conflicts of economic self-interest, but by conflicting ideas of fairness. Taking as a guiding principle the conventional nature of private property, Murphy and Nagel show how taxes can only be evaluated as part of the overall system of property rights that they help to create. Justice or injustice (...) in taxation, they argue, can only mean justice or injustice in the system of property rights and entitlements that result from a particular regime. Taking up ethical issues about individual liberty, interpersonal obligation, and both collective and personal responsibility, Murphy and Nagel force us to reconsider how our tax policy shapes our system of property rights. (shrink)

The Umayyad State is widely criticized in the West as well as in its own region. Actually, this is normal situation. Because Hijaz Arabs who had no state experience, built a multinational state in short period of time. Yet, this caused serious matters. The fundamental point of the criticism is the payment of tax, also called jizya, which is taken from residents (mawālī) of Khorasan and Transoxania. However, in most studies on this subject, it is understood that the jizya taken (...) from mawālī is combined jizya and kharja, which is different type of tax. Although mawālī was tested for whether it passes religious criteria in critic periods or not, this situation did not last throughout the entire Umayyad history. It was continued for fifteen and twenty years. In this period, it was understood that the jizya tax taken from the mawālī, was caused by the unlawful practices of some regional governors, most of them were non-Muslim local tax officials and all their purpose was to collect the amount of combined jizya. It cannot be said that the Umayyad caliphs officially ordered written instructions in order to take the conceptual sense from the mawālī part. But some Khorasan governors, who detected that taxes were decreasing, blinked at the collection of the jizya from the mawālī.Summary: The tax policies of a state are of great importance for the political, social, and economic stability. A regular tax system minimizes the problems that the state mechanism might face. The establishment of a fair and just tax scheme is undoubtedly possible with a deep-rooted state experience. It is known that the Umayyad state which is the subject of this research has no state experience. Furthermore, ruling to the area which is on 13 million square kilometers and reaching to Kashgar in the East and to South France in the West and governing this multinational structure who are living on these regions, put the Umayyad government in a very difficult condition. With the vast borders and the stoppage of the conquests, some political, social and economic problems were experienced and these problems deeply affected the government. The groups which had argued with Shiites and Khārijites because of some various reasons led the country into collapsing. It is also known that many plague epidemics in the region of Damascus affected the society in a negative way, changing the capital and changing some of the border cities in favor of the Eastern Roman Empire.All these negativities certainly shaken the Umayyad state economically. It is understood from the data that the instability and political uncertainties in the country led to a decrease in the tax rates. For example, the Umayyad caliph ‘Abd al-Malik İbn Marwān period, only half of the tax was collected at the time of Hazrat ‘Umar could be collected. It can be said that the public who avoided the general policies of the state avoided giving tax, in other words, the tax evasion. Also, the increasing migration from village to city and due to that, the vacancy of tribute tax collected land, failure to obtain expected yield because of rent fights on fertile lands, and conversion process in non-Muslim community are included in other reasons of reduction of taxes.In the Umayyad period, the issue of taking the jizya from the mawālī can be considered in this context. We do not have an independent work or research article on how this practice was initiated, how it was and how it was taken from mawālī, and how it was a state policy, and how long it was sustained. The studies that touch on this subject are far from being holistic. Even in the main sources it is seen that the concepts of kharāj and jizya are not fully understood and therefore used interchangeably. This may be considered normal for the first period in which the concepts are not in place. However, in the following centuries, the works that were copyrighted and, except for a few, instead of understanding and explaining this confusion, chose to use the word jizya from these two words which can be used interchangeably in texts. Therefore, this approach has led to the widespread conviction that the Umayyad state has taken jizya from the mawālī in the conceptual sense.Al-Ḥajjāj ibn Yūsuf is claimed to have started the application of taken jizya from mawālī. However, Haccac aimed to provide the regularity of both agricultural products and the kharāj which is taken from farmers because of the status of the soil by sending Sawad villagers who migrated to the big cities and became Muslims by changing their religions. The status of the lands seized was decisive in taxation. According to this, the conquest and the territorial lands were taxed differently, but in some cases the same tax (kharāj) was taken. Non-Muslims who living in the territory of conquest were demanded jizya per capita. The jizya and kharāj tax collected from this category can be expressed as “joint jizya”. Regardless of whether the person is a Muslim or not, the fact that he was demanded from him due to the status of the land was interpreted by some researchers as juristic. However, in times of political instability, it is also a fact that mawālī is demanding jury in addition to the tribute tax. The point that is misunderstood or interpreted is that this practice was carried out throughout the entire Umayyad territory and the history. When examined, this distorted tax concept is actually concentrated in the area of Transoxania. Although some attempts were made to take the jizya from the mawālī to the country, the Umayyad caliphs have not allowed it. The practice of taking the jizya from the mawālī is actually followed by the killing Qutayba ibn Muslim al-Bāhilī (d. 96/715). This started political instability in the Transoxania and continued by some Khurāsān governors. These governors act according to the provocations of the Turkish governors and tax collectors of the region in order to be able to send their taxes completely. They claimed that the region in the region was not a sincere Muslim and, they continued to take the jizya from them.It can be said that jizya is not demanded as it is taken from non-Muslims in the common meaning from mawālī. Because any Umayyad caliph wrote no written instructions regarding this issue in the sources. It is understood that until the caliphate of ‘Umar b. ‘Abd al-‘Azîz, the Umayyad caliphs were not even aware of this distorted tax policy in the area of Transoxania. To put it once again, this practice was initiated by some Khurāsān governors with the concern that tax revenues might decrease. However, it should not be forgotten that this unfair practice after 96/715 is limited to certain governors. For example, during the tenure of Naṣr b. Seyyâr, the last governor of Khurāsān (120-131 / 738-748), the jizya tax was completely removed from the mawālī. Another activity that shows this action is regional and that was ordered by some governors of Khurāsān. Therefore, this practice does not reflect the Umayyad state policy. This is also apparent in the fact that the Shiites, Kharijites, and those who carried out the Abbasid Revolution for thirty-two years, did not make an anti-Umayyad propaganda with provoking the slave by the way of wrong application. (shrink)

Tax Revenues of Post - Communist E.U. Member Countries This article aims to analyze and evaluate tax policy of 10 post communist countries of the EU, especially the Slovak Republic and Czech Republic, during the their first 5 years in the community through the development of their tax revenues. Data to analyze are the data of the European Commission for the years 2003 to 2008. The subject of analysis is the total tax burden and the tax structure, i.e. direct (...) and indirect taxes, VAT, excise tax, environmental taxes, personal income tax and corporation tax. The analysis uses charts of the development of the monitored values.Overall, it is possible to say that although the 10 post-communist countries joined the European Union in the same period, and although in general these countries face similar problems in the economic and tax policies, their response to internal and external influences in area of tax revenues and mix are very often different. This is due to both their historical and cultural traditions, so the current specifics. (shrink)

One of the central issues in comparative law and political economy is whether the forces of globalization will result in the convergence of public policies across countries. Noting in particular that taxes collected still cover a considerable range across industrialized countries — from a low of 20% of GDP to a high of 50% — some have argued that globalization has not resulted in a loss of tax sovereignty. However, following a review of the evidence, in this Article we conclude (...) that globalization has had significant but subtle effects on tax levels and structures. Moreover, these pressures will make it increasingly difficult for countries to raise revenue to finance new public needs and to structure their tax systems in order to achieve a more socially acceptable distribution of income than what market forces dictate. Tax levels in most countries have remained essentially flat over the past twenty years, but there is a host of reasons for thinking they would have continued to rise were it not for the pressures of globalization. Statutory corporate tax rates have declined dramatically and, although corporate tax revenues have remained robust, this has been due to factors unrelated to deliberate tax policy choices. Personal marginal tax rates have also declined sharply and tax revenues have been increasingly raised by regressive consumption taxes. These trends stem from tax competition brought on by the forces of globalization, not from changing ideas or other political variables. In this Article we conclude that in order to prevent tax competition from completely eroding the ability of countries to fashion their own tax systems, there will have to be considerable cooperation among the major countries and some harmonization of aspects of their tax systems, particularly as they apply to footloose factors of production. (shrink)

Today’s views and analyses about taxation are dominated by the social-welfare approach based on various categories of utilitarianism, most notably those developed by the optimal-tax literature. By contrast, this paper focuses on the ethical foundations of taxation and analyses a tradition that harks back to the 17th century. In particular, we emphasise the notion of legitimate taxation in the history of economic thought from the libertarian, the classical-liberal and socialist perspectives. By means of this very notion, we define the essence (...) of a desirable tax structure and draw conclusions in regard to today’s tax policies. (shrink)

Population obesity and associated morbidities pose significant public health and economic burdens in the United Kingdom, United States, and globally. As a response, public health initiatives often seek to change individuals’ unhealthy behavior, with the dual aims of improving their health and conserving health care resources. One such initiative—taxes on sugar‐sweetened beverages (SSB)—has sparked considerable ethical debate. Prominent in the debate are arguments seeking to demonstrate the supposed impermissibility of SSB taxes and similar policies on the grounds that they interfere (...) with individuals’ freedom and autonomy. Commentators have often assumed that a policy intended to restrict or change private individuals’ consumption behavior will necessarily curtail freedom and, as a corollary, will undermine individuals’ autonomy with respect to their consumption choices. Yet this assumption involves a conceptual mistake. To address the misunderstanding, it’s necessary to attend to the differences between negative liberty, freedom of options, and autonomy. Ultimately, concerns about negative liberty, freedom, and autonomy do not provide strong grounds for opposing SSB taxes. (shrink)

In a regressive tax system, lower-income taxpayers pay larger percentages of their incomes in taxes compared to higher-income taxpayers. Although most policymakers and citizens view regressive taxation as generally unfair and unethical, the U.S. tax system taxes wage, salary, and self-employment income in a manner that deliberately subjects lower-income taxpayers to marginal tax rates that are greater than those imposed on higher-income taxpayers. As a result, some lower-income taxpayers pay a larger percentage of their income in taxes than higher-income taxpayers. (...) In this essay, we argue that this regressiveness in the taxation of salaried income is unfair and unethical. We then evaluate President Obama’s social security plan, which would retain most of the current tax system’s regressive structure. Finally, we offer two simple alternative proposals that are non-regressive, and thus more fair and ethical approaches to the taxation of salaried income. (shrink)

Inequality, as well as the scope of the duty of justice to reduce it, has always been a central concern of political justice. Income taxation has been seen as a key tool for redistribution and the state was the arena for discussions of justice. Globalization and the tax competition it fosters among states change the context for the discussion of distributive justice. Given the state’s fading coercive power in taxation and the decreasing power of its citizenry to co-author its collective (...) will due to global competition, we can no longer assume that justice can be realized within the parameters of the state. International tax policy in an effort to retain justice often opts for cooperation as a vehicle to support distributive justice. But cooperation among states is more than a way for them to promote their aims through bargaining. Rather, it is a way for states to regain legitimacy by sustaining their very ability to ensure the collective action of their citizens and to treat them with equal respect and concern. The traditional discussion in international taxation seems to endorse a statist position — implicitly assuming that when states bargain for a multilateral deal, justice is completely mediated by the agreement of the states. In contrast, this Article argues that such a multilateral regime intended to provide the state with fundamental legitimacy requires independent justification. Contrary to the conventional statist position, I maintain that cooperating states have a duty to ensure that the constituents of all cooperating states are not treated unjustly because of the agreement. I argue that not only cosmopolitanism but political justice too requires that a justifiable cooperative regime must improve the welfare of the least well-off citizens in all cooperating states. I explain that cooperation alone is no guarantee of improved welfare and that certain transfer payments between rich and poor countries might be required to ensure this. (shrink)

Under conditions of high capital mobility, states are pressurised into various forms of tax competition to attract or retain capital and investors. When this occurs, the capacity of domestic institutions autonomously to generate fiscal policies is constrained. What exactly, if anything, is unjust about this phenomenon? This paper argues that tax competition puts particular pressure on internationalists, who must acknowledge that its occurrence makes our obligations of global justice more demanding, and that such obligations require supranational institutions in order to (...) be discharged. However, to the extent that tax competition is unjust from an internationalist point of view, this is due to the specific harm it does to states. Thus, the paper makes three contributions to the literature: it shows that tax competition has an impact on the demandingness of internationalist obligations of justice; discharging such obligations commits internationalists to accept a higher level of supranational institutionalization than is currently acknowledged; yet both the specific content of such obligations, and the kind of supranational regulation that is needed to discharge them, differ from those which cosmopolitans support. In sum, there are some cosmopolitan bullets which internationalists must bite, and others which they should continue to resist. (shrink)

The coronavirus disease 2019 (COVID-19) crisis ought to serve as a reminder about the costs of failure to consider another long-term risk, climate change. For this reason, it is imperative to consider the merits of policies that may help to limit climate damages. This essay rebuts three common objections to carbon taxes: (1) that they do not change behaviour, (2) that they generate unfair burdens and increase inequality, and (3) that fundamental, systemic change is needed instead of carbon taxes. The (...) responses are (1) that there is both theoretical and empirical reason to think that carbon taxes do change behaviour, with larger taxes changing it to a greater extent; (2) that undistributed carbon taxes are regressive but distributing the tax receipts can alleviate that regressivity (and, in many cases, make the overall effect progressive); and (3) that while small changes for increasing democratic decision-making may be helpful, (fundamental) change takes time and the climate crisis requires urgent action. [Open access] //// -/- La crise de lamaladie à coronavirus 2019 (COVID-19) devrait servir de rappel sur les coûts de la non-prise en compte d’un autre risque à long terme, les changements climatiques. Pour cette raison, il est impératif de considérer lesmérites des politiques susceptibles de contribuer à limiter les changements climatiques. Cet essai réfute trois objections courantes aux taxes sur le carbone : (1) qu’elles ne changent pas les comportements (2) qu’elles génèrent des charges injustes et augmentent les inégalités, et (3) qu’un changement fondamental et systémique est nécessaire au lieu de taxes sur le carbone. Les réponses sont (1) qu’il existe des raisons à la fois théoriques et empiriques de penser que les taxes sur le carbone modifient effectivement les comportements, et que des taxes plus élevées les modifient dans une plus grande mesure; (2) que les taxes sur le carbone non distribuées sont régressives,mais que la distribution des recettes fiscales peut atténuer cette régressivité (et, dans de nombreux cas, rendre l’effet global progressif); et (3) que, bien que de petits changements pour l’amélioration de la prise de décision démocratique peuvent être utiles, un changement (fondamental) prend du temps et la crise climatique exige une action urgente. (shrink)

Soda taxes are controversial. While proponents point to their potential health benefits and the public projects that could be funded with their revenue, critics argue that they are paternalistic and regressive. In this paper, we explore the prospects for designing a just soda tax, one that appropriately balances the often-competing ethical considerations of promoting social welfare, respecting people’s autonomy, and ensuring distributive fairness. We argue that policymakers have several paths forward for designing a just soda tax, but that the considerations (...) relevant to ethical policy design are more complicated than is sometimes acknowledged. (shrink)

Four years after the Panama Papers scandal, tax avoidance remains an urgent moral-political problem. Moving beyond both the academic and policy mainstream, I advocate the “democratization of tax enforcement,” by which I mean systematic efforts to make tax avoiders accountable to the judgment of ordinary citizens. Both individual oligarchs and multinational corporations have access to sophisticated tax avoidance strategies that impose significant fiscal costs on democracies and exacerbate preexisting distributive and political inequalities. Yet much contemporary tax sheltering occurs within (...) the letter of the law, rendering criminal sanctions ineffective. In response, I argue for the creation of Citizen Tax Juries, deliberative minipublics empowered to scrutinize tax avoiders, demand accountability, and facilitate concrete reforms. This proposal thus responds to the wider aspiration, within contemporary democratic theory, to secure more popular control over essential economic processes. (shrink)

The paper presents, in the synthetic way, the issue of the rationality of the tax system and taxation principles in relation to the clearly visible fiscal crisis in the 21st century caused by, among others, COVID-19 pandemic. The analysis which is theoretical (descriptive, comparative) was carried out by using tools indicated in the area of New Institutional Economics (NIE). Attention was devoted primarily to the importance of specific institutional arrangements, broadly understood as the “rules of the game” applicable in the (...) political and economic spheres, and related to the problems of public finances. Research has shown that the appropriate design of tax rules may contribute, to some extent, to limiting the fiscal crisis. Tax policy, and even more broadly, fiscal policy, may determine the formula in which the economic achievements regarding compliance with tax principles and fiscal rules can be implemented. What is primarily important is the legal framework (one of the most important formal institutions) within which state policy in the field of public finances should be implemented. (shrink)

Prior research shows taxpayers’ perceptions of fairness leads to greater cooperation and compliance with tax authorities. Yet our understanding of tax fairness has been hampered by its general reliance upon models and measures of fairness developed by organizational fairness research, even though fairness is a perception subject to contextual influences. Accordingly, we attempt to gain insight into the influence of contextual factors on fairness through the development of a theoretically based and empirically derived model of tax fairness, grounded in organizational (...) literature, but empirically tested in the tax context. Our analysis shows the extent to which items and dimensions found in the organizational fairness literature reflect taxpayers’ perceptions of tax fairness. Most importantly, our findings contribute to fairness research by identifying the role of relevant comparison groups in affecting perceptions of fairness, and thereby extends our understanding of the role of context in affecting fairness perceptions. Furthermore, by identifying the dimensions and items incorporated in perceptions of tax fairness, our study provides a foundation for tax researchers and policy makers to determine how best to promote voluntary taxpayers’ compliance and in so doing, mitigate tax avoidance and tax evasion. (shrink)

Rich people stash away trillions of dollars in tax havens like Switzerland, the Cayman Islands, or Singapore. Multinational corporations shift their profits to low-tax jurisdictions like Ireland or Panama to avoid paying tax. Recent stories in the media about Apple, Google, Starbucks, and Fiat are just the tip of the iceberg. There is hardly any multinational today that respects not just the letter but also the spirit of tax laws. All this becomes possible due to tax competition, with countries strategically (...) designing fiscal policy to attract capital from abroad. The loopholes in national tax regimes that tax competition generates and exploits draw into question political economic life as we presently know it. They undermine the fiscal autonomy of political communities and contribute to rising inequalities in income and wealth.Building on a careful analysis of the ethical challenges raised by a world of tax competition, this book puts forward a normative and institutional framework to regulate the practice. In short, individuals and corporations should pay tax in the jurisdictions of which they are members, where this membership can come in degrees. Moreover, the strategic tax setting of states should be limited in important ways. An International Tax Organisation should be created to enforce the principles of tax justice.The author defends this call for reform against two important objections. First, Dietsch refutes the suggestion that regulating tax competition is inefficient. Second, he argues that regulation of this sort, rather than representing a constraint on national sovereignty, in fact turns out to be a requirement of sovereignty in a global economy. The book closes with a series of reflections on the obligations that the beneficiaries of tax competition have towards the losers both prior to any institutional reform as well as in its aftermath. (shrink)

Barbara Fried takes the view that uniform taxation—that is, a single rate applicable to all income levels—cannot be defended on any grounds of justice. She goes further by saying that, of all possible rate structures, it might be “the hardest one”? to ground in “a”? theory of fairness. Using the contractarian-constitutional perspective advanced by John Rawls and James Buchanan, this article argues that tax uniformity can be seen as a requirement of justice. After modelling how the political world realistically decides (...) to distribute tax shares (self-interested parties act under a majority constraint), I show how the uniformity principle could emerge from the constitutional contract. In other words, rational individuals would choose uniformity as a procedural constraint under a “veil of uncertainty”?; that is, with limited knowledge regarding their positions under the future application of the rule. Moreover, I elucidate how the uniformity requirement integrates generalized criteria of fairness and efficiency into fiscal politics as it precludes fiscal exploitation and constrains majorities, and their most influential subgroups, to opt for policies in the direction of the Pareto frontier, and as such promotes outcomes acceptable to all participants. (shrink)

Imagine two friends. Anna inherits nothing and works for every penny she has, while Mary inherits millions. How should a world that respects individual autonomy and private property rights treat Anna’s earnings and Mary’s inheritance? Should it tax them the same, or tax one more heavily than the other? If the latter, which one? The conventional wisdom holds that although some “right” libertarian theories justify taxing income, none justify taxing inheritances. Such taxes are “expropriations” and “an especially cruel injury” that (...) “run[] roughshod over [a] deceased’s interest in the ends his property will serve.” This essay explores the standard libertarian objections to taxing gifts and bequests and argues that libertarians overstate their case when distinguishing the taxation of gratuitous transfers from other types of taxation. At minimum, the benefit theory of taxation embraced by many minimal statists and classical liberals mandates that the receipt of gifts and bequests should be taxed to the recipient. Moreover, the goals of curbing inherited political power and preventing wealthy families from insulating their members from market competition provide two additional explanations for why taxing inheritances to recipients is compatible with classical liberal values. (shrink)

The tax code has served as the primary vehicle for subsidizing health care in the U.S. for most of the last century, and will likely play a role in any future reform efforts. This paper discusses the role that the tax law can play in the implementation of health reform. The interplay, however, between the law and health policy presents a series of critical design and implementation challenges with which any health care reform package must grapple. This paper considers (...) some of the most pressing of these issues, and while it does not prescribe a particular outcome, it attempts to identify potential tax solutions. Additionally, the paper addresses the policy and administrative design questions that any discussion of these solutions should take into account. (shrink)

Within the health care industry, the move from regulatory cost controls to market competition has generated rapid and dramatic restructuring of providers. To enhance their competitive positions in the evolving market, many health care organizations are pursuing the ownership and integration of all elements and stages of health care delivery and payment, with the goal of increasing access to capital and lowering costs through administrative efficiencies and economies of scale. As of July 1994, 24 percent of hospitals were members of (...) an integrated delivery system, and 47 percent were involved in IDS development.IDSs pose a singular challenge to the Internal Revenue Service. The IRS recognizes that its traditional policies for granting tax exempt status are not flexible enough for the competitive and rapidly changing health care market. In recent years, the IRS has taken a more active role in scrutinizing emerging health care institutions seeking taxexempt status. (shrink)

Due to G-7 countries' commitment to sustaining United Nations Sustainable Development Goal 8, which focuses on sustainable economic growth, there is a need to investigate the impact of tax revenue and institutional quality on economic growth, considering the role of artificial intelligence (AI) in the G-7 countries from 2012 to 2022. Cross-Sectional Augmented Autoregressive Distributed Lag (CS-ARDL) technique is used to analyze the data. The study's findings indicate a long-run equilibrium relationship among the variables under examination. The causality results can (...) be categorized as bidirectional, unidirectional, or indicating no causality. Based on the CS-ARDL results, the study recommends that G-7 governments and policymakers prioritize and strengthen the integration of AI into their institutions to stimulate growth in both the short- and long-term. However, the study cautions against overlooking the interaction between AI and tax revenue, as it did not demonstrate support for economic growth. While the interaction between AI and institutional quality shows potential for contributing to growth, it is crucial to implement robust measures to mitigate any potential negative effects that may arise from AI's interaction with tax systems. Therefore, the study suggests the development of AI-friendly tax policies within the G-7 countries, considering the nascent nature of the AI sector/industry. (shrink)

Este trabajo analiza la relevancia de la noción de capacidad contributiva en una concepción igualitaria de la justicia y en particular si puede concebirse como una garantía que deriva de la protección de ciertas libertades básicas consideradas prioritarias. Se argumenta que no tiene este lugar y que por lo tanto la imposición de tributos no debe respetar esta restricción ya que no existe libertad básica que sea protegida por el principio de "capacidad contributiva". This paper discusses the relevance of the (...) notion of "ability to pay" in an egalitarian conception of justice and particularly whether it could play a role as a guarantee that derives from a requirement of protection of certain basic liberties considered as priorities. It is argued that it does not have this place, thereby tax policies should not respect this constraint because there is no liberty protected by the "ability to pay" principle. (shrink)

Carbon emission has negative externalities, which will cause severe natural and social problems. In recent years, more and more attention has been paid to carbon emission reduction issue both in academic and application fields. This paper aims to explore the impact of punitive carbon tax and incentive carbon emission reduction subsidy on economy and environment through the dynamic stochastic general equilibrium framework. The results show that both carbon tax and carbon emission reduction subsidy policies can help to reduce carbon emissions (...) and to improve environment quality. In addition, carbon emission reduction subsidy has a positive impact on economy, while carbon tax has the opposite impact. It follows that the incentive carbon emission reduction policy is more conducive to the coordinated development of economy and environment. This research can be a guideline for the government to formulate carbon emission abatement policies from the perspective of coordinated development. (shrink)

The relationship between tax authorities and taxpayers is essential for tax compliance. The aim of the present paper was to explore systematically the determinants of this relationship and related tax compliance behaviors based on the extended slippery slope framework. We used in-depth qualitative interviews with 33 self-employed taxpayers and 30 tax auditors. Interviewees described the tax relationship along the extended slippery slope framework concepts of power and trust. However, also novel sub-categories of power (e.g., setting deadlines) and trust (e.g., personal (...) assistance) were mentioned. Furthermore, also little-studied categories of tax behavior emerged, such as accepting tax behavior e.g., being available to the tax authorities, or stalling tax behavior e.g., the intentional creation of complexity. The results comprehensively summarize the determinants of the tax relationship and tax compliance behaviors. Additionally, results highlight future research possibilities and illustrate policy interventions. (shrink)

Corporate concentration in the United States has been on the rise in recent years, sparking a heated debate about its causes, consequences, and potential remedies. This article examines a facet of public policy that has been neglected in the debate: corporate taxation. Developing the first empirical mapping of the effective tax rates of nonfinancial corporations disaggregated by size and broken down by jurisdiction, the article reveals a striking tax advantage for big business at home and abroad. The analysis goes (...) on to show how persistent regressivity in the tax structure is bound up with the increasing relative power of large corporations within the corporate universe, as well as a shift in firm-level power relations. As large corporations become less disposed to investments that may indirectly benefit ordinary workers, they become more disposed to shareholder value enhancement that directly benefits the asset-rich. What this means is that the corporate tax structure is connected not only to rising corporate concentration but also to widening household inequality. (shrink)

We present an algorithm that can anticipate tax evasion by modeling the co-evolution of tax schemes with auditing policies. Malicious tax non-compliance, or evasion, accounts for billions of lost revenue each year. Unfortunately when tax administrators change the tax laws or auditing procedures to eliminate known fraudulent schemes another potentially more profitable scheme takes it place. Modeling both the tax schemes and auditing policies within a single framework can therefore provide major advantages. In particular we can explore the likely forms (...) of tax schemes in response to changes in audit policies. This can serve as an early warning system to help focus enforcement efforts. In addition, the audit policies can be fine tuned to help improve tax scheme detection. We demonstrate our approach using the iBOB tax scheme and show it can capture the co-evolution between tax evasion and audit policy. Our experiments shows the expected oscillatory behavior of a biological co-evolving system. (shrink)

This Legal Solutions in Health Reform paper discusses the role that tax law can play in the implementation of health reform. The tax code has served as the primary vehicle for subsidizing health care in the U.S. for most of the last century and will likely play a role in any future reform efforts. However, the interplay between tax law and health policy presents a series of critical design and implementation challenges with which any health care reform package — (...) be they liberal or conservative — must grapple. This paper considers some of the most pressing of these issues. While it does not prescribe a particular outcome, it will attempt to identify potential tax solutions that might receive broad support and to observe the policy and administrative design questions that any discussion of these solutions should take into account. (shrink)