Using Human-Capital Theory to Establish a Potential-Income Tax
There are good arguments for an individual income tax on potential income, but a drawback to such a tax is the significant administrative concern regardingits implementation. This paper argues that human-capital theory provides a widely accepted and straightforward method to estimate potential income using observed characteristics of individuals, and operationalizes this approach using data for the U.S. The paper also suggests that a potential-income tax is verysimilar to a presumptive income tax. The paper concludes by reviewing some significant problems with the implementation of a potential or presumptive income tax.
Volume (Year): 63 (2007)
Issue (Month): 3 (September)
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- Richard M. Bird & Sally Wallace, 2003. "Is It Really so Hard to Tax the Hard-to-Tax? The Context and Role of Presumptive Taxes," International Tax Program Papers 0307, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
- Allingham, M. G., 1975. "Towards an ability tax," Journal of Public Economics, Elsevier, vol. 4(4), pages 361-376, November.
- Milka Casanegra de Jantscher & Vito Tanzi, 1987. "Presumptive Income Taxation: Administrative, Efficiency, and Equity Aspects," IMF Working Papers 87/54, International Monetary Fund.
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- repec:cup:cbooks:9780521397421 is not listed on IDEAS
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