Stuart Adam () (Institute for Fiscal Studies) Glen Loutzenhiser
Abstract
Income Tax and National Insurance are now sufficiently similar that merging them appears to be a plausible option, yet still sufficiently different that integration raises significant difficulties. This paper surveys the potential benefits of integration - increased transparency and reduced administrative and compliance costs - and the potential obstacles, assessing the extent to which each of the differences between Income Tax and NICs - in particular the contributory principle, the levying of an employer charge and the differences in tax base - constitute serious barriers to integration. The paper concludes that few of the difficulties look individually prohibitive, but that trying too hard to avoid significant reform of the current policy framework could produce a merged tax so complicated as to nullify much or all of the benefits of integration.
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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number
W07/21.
Length: Date of creation: Dec 2007 Date of revision: Handle: RePEc:ifs:ifsewp:07/21
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Find related papers by JEL classification: H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies H83 - Public Economics - - Miscellaneous Issues - - - Public Administration K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
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