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Tax Theory and Tax Practice: The Problems of Defining, Measuring and Assessing Tax Bases


  • Antonio Pedone


The wide gap between tax theory and tax practice may be traced back, among other things, to the focus in tax theory on the level and optimal structure of tax rates, assuming that tax bases are consistently defined, precisely measurable and readily and uniformly assessable. This approach overlooks the variances between tax design, tax law, tax impact, tax incidence and tax perception. The effects of taxes on efficiency and equity depend not just on the tax†rate schedule adopted but also on differences in tax treatments resulting from the definition, measurement and assessment of tax bases. The Italian experience in the field of income taxation shows the extent to which the definition, measurement and assessment of tax bases matter. Many problems associated with defining, measuring and assessing tax bases, which the personal nature and high progressivity of income tax had contributed to highlighting and accentuating, remain still unresolved and require further research of a better understanding of the rationale, causes and effects of many differentiated tax treatments.

Suggested Citation

  • Antonio Pedone, 2009. "Tax Theory and Tax Practice: The Problems of Defining, Measuring and Assessing Tax Bases," Working Papers 119, University of Rome La Sapienza, Department of Public Economics.
  • Handle: RePEc:sap:wpaper:wp119

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    References listed on IDEAS

    1. Anderson, Kym, 1987. "On why agriculture declines with economic growth," Agricultural Economics, Blackwell, vol. 1(3), pages 195-207, October.
    2. Syrquin, Moshe, 1988. "Patterns of structural change," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 7, pages 203-273 Elsevier.
    3. Saraceno, Elena, 1994. "Alternative Readings of Spatial Differentiation: The Rural versus the Local Economy Approach in Italy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 21(3-4), pages 451-474.
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    Cited by:

    1. Rosella Levaggi & Francesco Menoncin, 2015. "Dynamic Tax Evasion with Audits based on Conspicuous Consumption," Working papers 33, Società Italiana di Economia Pubblica.
    2. Bernardi, Luigi, 2009. "Le tasse in Europa dagli anni novanta
      [Taxation in Europe since the Years 1990s]
      ," MPRA Paper 23441, University Library of Munich, Germany.
    3. Rosella Levaggi & Francesco Menoncin, 2016. "Dynamic tax evasion with audits based on visible consumption," Journal of Economics, Springer, vol. 119(2), pages 131-146, October.

    More about this item


    tax treatment; tax design; personal income tax; tax assessment.;

    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


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