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Cost Benefit Analysis of Presumptive Taxation

Author

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  • Shlomo Yitzhaki

    (Hebrew University and Central Bureau of Statistics)

Abstract

The structure of the paper is the following: the next section surveys different forms of presumptive taxes, the third section illustrates the kind of presumptive taxes that existed in Israel, relying on a rare publication in which tax authorities published methods to determine how reasonable the declared income is. The fourth section considers the pros and cons of presumptive taxes in a developed economy, while the fifth section applies the Marginal Cost of Public Funds criterion in order to formally compare a presumptive tax to a standard income tax.

Suggested Citation

  • Shlomo Yitzhaki, 2006. "Cost Benefit Analysis of Presumptive Taxation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0631, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0631
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0631.pdf
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    References listed on IDEAS

    as
    1. Milka Casanegra de Jantscher & Vito Tanzi, 1987. "Presumptive Income Taxation; Administrative, Efficiency, and Equity Aspects," IMF Working Papers 87/54, International Monetary Fund.
    2. Lars P. Feld & Bruno S. Frey, 2002. "Trust breeds trust: How taxpayers are treated," Economics of Governance, Springer, vol. 3(2), pages 87-99, July.
    3. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470 Elsevier.
    4. Gordon, Roger & Li, Wei, 2009. "Tax structures in developing countries: Many puzzles and a possible explanation," Journal of Public Economics, Elsevier, pages 855-866.
    5. Laurence Jacquet & Bruno Van der Linden, 2006. "The Normative Analysis of Tagging Revisited: Dealing with Stigmatization," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(2), pages 168-198, June.
    6. Alessandro Balestrino & Umberto Galmarini, 2005. "On the Redistributive Properties of Presumptive Taxation," CESifo Working Paper Series 1381, CESifo Group Munich.
    7. Stern, Nicholas, 1982. "Optimum taxation with errors in administration," Journal of Public Economics, Elsevier, vol. 17(2), pages 181-211, March.
    8. Joel Slemrod & Shlomo Yitzhaki, 1994. "Analyzing the standard deduction as a presumptive tax," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 1(1), pages 25-34, February.
    9. Efraim Sadka, 1976. "On Income Distribution, Incentive Effects and Optimal Income Taxation," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 261-267.
    10. 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.
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    Cited by:

    1. Marchese, Carla & Privileggi, Fabio, 2009. "A model of the Italian cut-off system for taxing small businesses," Research in Economics, Elsevier, vol. 63(2), pages 127-134, June.

    More about this item

    Keywords

    Presumptive Taxation. tax reform; individual tax;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other

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