Economic Effects of A Personal Capital Income Tax Add-on to a Consumption Tax
AbstractThe general idea is the following: any tax authority that respects basic human rights has to impose taxes on a base to avoid random and arbitrary taxation. The tax base should be announced prior to the imposition of the tax and therefore, taxpayers are given an advanced warning concerning the tax base. The advanced warning enables the taxpayers to adjust the tax base to the new circumstances so that they can adjust their behavior to the existence of the tax. This adjustment of the tax base by the taxpayer is responsible to the excess burden of the tax. Retroactive taxes, that is taxes imposed on tax bases determined in the past and that, therefore, cannot be changed by the taxpayers are considered as unethical. Although the determination of the tax base is just the first stage in the taxation process- tax liability is determined by applying a rate or a schedule of rates to the base- most of the complications that arise in taxation (and as a result are responsible for administrative and compliance costs) arise in the determination of the tax base.
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Bibliographic InfoPaper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0715.
Length: 28 pages
Date of creation: 01 Jun 2007
Date of revision:
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Web page: http://aysps.gsu.edu/isp/index.html
Personal Capital Income Tax; Consumption Tax; tax bas; tax authority;
Other versions of this item:
- John W. Diamond & George R. Zodrow, 2006. "Economic Effects of a Personal Capital Income Tax Add-On to a Consumption Tax," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0629, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- NEP-ALL-2008-01-05 (All new papers)
- NEP-PBE-2008-01-05 (Public Economics)
- NEP-PUB-2008-01-05 (Public Finance)
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