Tax - Revision history

Vipul: /* Classification based on nature of quantity being taxed */

2014-01-11T21:33:07Z

Classification based on nature of quantity being taxed

← Older revision		Revision as of 21:33, 11 January 2014
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	\| [[income tax]] \|\| tax on individuals and households based on the [[individual or household income\|income]] earned.		\| [[income tax]] \|\| tax on individuals and households based on the [[individual or household income\|income]] earned.
	\|-		\|-
	\| [[capital gains tax]]es \|\| a form/variation of the income tax that taxes the gains made on assets owned (such as land, capital, shares in companies)		\| [[capital gains tax]] \|\| a form/variation of the income tax that taxes the gains made on assets owned (such as land, capital, shares in companies)
	\|-		\|-
	\| [[consumption tax]]: [[sales tax]] and [[value-added tax]] \|\| tax on consumption or purchase of items. The sales tax is a point-of-sale tax imposed at the final sale to the consumer, while the value-added tax is a tax imposed on the value added at every step of the production process.		\| [[consumption tax]]: [[sales tax]] and [[value-added tax]] \|\| tax on consumption or purchase of items. The sales tax is a point-of-sale tax imposed at the final sale to the consumer, while the value-added tax is a tax imposed on the value added at every step of the production process.

Vipul at 04:17, 6 September 2013

2013-09-06T04:17:47Z

← Older revision		Revision as of 04:17, 6 September 2013
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	\|-		\|-
	\| Money and in-kind help for some subgroups of the population \|\| Ambiguous \|\| Taxes may fund a welfare state, bailouts, and other forms of government spending on particular groups. Prima facie, there is no reason why such a transfer of wealth should generate a net social benefit or cost.<br>Arguments for the benefit typically rely on one or more of these: (i) the value of money is more for the recipients of welfare or bailouts than for net taxpayers, (ii) the government achieves some kind of efficiency in providing the services that wouldn't be possible through other means, or (iii) some form of an ethical argument such as equal opportunity or correcting past injustice. Conversely, arguments against such uses of taxes also hinge on questioning or reversing claims of the above sort, in addition to considering the distortion of incentives created by wealth transfers.		\| Money and in-kind help for some subgroups of the population \|\| Ambiguous \|\| Taxes may fund a welfare state, bailouts, and other forms of government spending on particular groups. Prima facie, there is no reason why such a transfer of wealth should generate a net social benefit or cost.<br>Arguments for the benefit typically rely on one or more of these: (i) the value of money is more for the recipients of welfare or bailouts than for net taxpayers, (ii) the government achieves some kind of efficiency in providing the services that wouldn't be possible through other means, or (iii) some form of an ethical argument such as equal opportunity or correcting past injustice. Conversely, arguments against such uses of taxes also hinge on questioning or reversing claims of the above sort, in addition to considering the distortion of incentives created by wealth transfers.
			\|-
			\| People are required to report private data about their activities, earnings, etc. in their tax forms \|\| Cost \|\| The reporting requirements that accompany tax filing may lead to a loss of privacy, particularly if the tax collection agency does not take adequate precautions to maintain the confidentiality of tax documents filed.
			\|-
			\| More statistical information about the quantities being taxed \|\| Benefit \|\| Tax forms require individuals to report the quantities being taxed, and therefore, tax collection agencies are in a good position to generate, or cross-check, data on the totals and distributions of these quantities within the population being taxed.
	\|}		\|}

			==Implementation of taxation==

			One of the main challenges with taxation is the challenge of ensuring a high rate of [[tax compliance]]. Tax compliance refers to the extent to which people who are subject to the tax pay the amount of tax stipulated by the law. [[Tax evasion]] refers to the phenomenon of people avoiding payment of taxes, either by using legal loopholes or by failing to report the quantities being taxed.

			To ensure a high rate of tax compliance, tax collection agencies usually come equipped with a variety of coercive powers to use against people whom they suspect of tax evasion, such as tax audits.

	==Tax revenue==		==Tax revenue==
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	==Ethics of taxation==		==Ethics of taxation==

	~~There are a number~~ of ~~different ethical views on~~ taxation.		===Ethics of taxation in principle===

	* One extreme is to view taxation as a violation of the [[self-ownership principle]] or of [[property right]]s. Taxation here is viewed as being similar to slavery, servitude, conscription, or confiscation of one's property, albeit not necessarily as bad as these.		* One extreme is to view taxation as a violation of the [[self-ownership principle]] or of [[property right]]s. Taxation here is viewed as being similar to slavery, servitude, conscription, or confiscation of one's property, albeit not necessarily as bad as these.
	* A middle position is to view taxation as a necessary evil to fund certain necessary government programs (provision of [[public good]]s, maintenance of a safety net, etc. -- what government programs qualify as necessary is itself moot), but with the view that if it were possible for these programs to not be necessary, or to be funded in other ways, then taxation would indeed be immoral.		* A middle position is to view taxation as a necessary evil to fund certain necessary government programs (provision of [[public good]]s, maintenance of a safety net, etc. -- what government programs qualify as necessary is itself moot), but with the view that if it were possible for these programs to not be necessary, or to be funded in other ways, then taxation would indeed be immoral.
	* The other extreme is to view taxation as desirable in and of itself, either as a glue that holds society together, or as a means of ensuring democratic accountability, or as a mechanism to bring about equal opportunity.		* The other extreme is to view taxation as desirable in and of itself, either as a glue that holds society together, or as a means of ensuring democratic accountability, or as a mechanism to bring about equal opportunity.

			===Ethics of the implementation of taxation===

			Given the reality of tax evasion and the challenges of tax compliance, taxation is accompanied both by reporting requirements and by coercive powers vested in the tax collection agency. These can pose threats to the liberties and privacy of individuals who are rightly or wrongly suspected of tax evasion. It may also be possible for tax collection agencies to misuse their authority by ordering tax audits, or leaking confidential reported tax information, for disliked groups and individuals.

Vipul: /* Classification based on purpose */

2013-09-06T02:13:19Z

Classification based on purpose

← Older revision		Revision as of 02:13, 6 September 2013
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	Broadly speaking, there are three justifications for taxes:		Broadly speaking, there are three justifications for taxes:

	# '''Revenue justification''': To raise revenue for the taxing authority, which it may then use in a variety of ways		# '''Revenue justification''': To raise revenue for the taxing authority, which it may then use in a variety of ways, including:
			#* Provision of government services that have have some of the characteristics of [[public good]]s
			#* Redistributing to some of the poorest or worst-off people.
	# '''Incentive justification''': To encourage/discourage specific types of activities and/or raise money that can mitigate the effects of the activities being taxed. For instance, [[Pigovian tax]]es are levied to reflect [[external cost]]s of activities to the participants. Similarly, [[sin tax]]es are meant to reduce incentives for people to perform activities that may be harmful to them.		# '''Incentive justification''': To encourage/discourage specific types of activities and/or raise money that can mitigate the effects of the activities being taxed. For instance, [[Pigovian tax]]es are levied to reflect [[external cost]]s of activities to the participants. Similarly, [[sin tax]]es are meant to reduce incentives for people to perform activities that may be harmful to them.
	# '''Group/class warfare justification''': Taxes may be levied on people in certain groups in order to reduce the wealth of the people in these groups relative to others. Unpopular ethnic groups in democratic and dictatorial countries may suffer these problems. High taxes on the rich may also be levied in order to reduce their incomes and wealth and bring it down to that of other people. Taxes may be levied by politicians in power on those groups that oppose their rule. Conversely, tax breaks and tax credits may be given to popular groups or groups that enjoy a special connection with those in power.		# '''Group/class warfare justification''': Taxes may be levied on people in certain groups in order to reduce the wealth of the people in these groups relative to others. Unpopular ethnic groups in democratic and dictatorial countries may suffer these problems. High taxes on the rich may also be levied in order to reduce their incomes and wealth and bring it down to that of other people. Taxes may be levied by politicians in power on those groups that oppose their rule. Conversely, tax breaks and tax credits may be given to popular groups or groups that enjoy a special connection with those in power.

Vipul: /* Optimal tax rates need not be revenue-maximizing */

2013-07-10T01:17:42Z

Optimal tax rates need not be revenue-maximizing

← Older revision		Revision as of 01:17, 10 July 2013
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	* Democratically elected leaders who need to face elections in a short period of time: Trade off between the benefits of greater tax revenues (which can then be spent on buying support or implementing popular programs) against the cost to approval ratings from high tax rates.		* Democratically elected leaders who need to face elections in a short period of time: Trade off between the benefits of greater tax revenues (which can then be spent on buying support or implementing popular programs) against the cost to approval ratings from high tax rates.

	Generally speaking, the optimal tax rate should not be ''more'' than the revenue-maximizing tax rate, but it may well be ''less''. There are two kinds of exceptions: exceptions where the goal of taxation is not revenue but discouraging specific activities, and exceptions ~~is when~~ some democratically elected politicians are playing to popular dislike of specific groups (the rich, ethnic minorities, foreigners, etc.) by taxing them punitively. In practice, rationally self-interested politicians are likely to endorse high taxes on unpopular groups in rhetoric but not implement them in practice, and/or offer loopholes.		Generally speaking, the optimal tax rate should not be ''more'' than the revenue-maximizing tax rate, but it may well be ''less''. There are two kinds of exceptions: exceptions where the goal of taxation is not revenue but discouraging specific activities, and exceptions where some democratically elected politicians are playing to popular dislike of specific groups (the rich, ethnic minorities, foreigners, etc.) by taxing them punitively. In practice, rationally self-interested politicians are likely to endorse high taxes on unpopular groups in rhetoric but not implement them in practice, and/or offer loopholes.

	==Ethics of taxation==		==Ethics of taxation==

Vipul: /* Costs and benefits of taxation */

2013-06-08T21:50:43Z

Costs and benefits of taxation

← Older revision		Revision as of 21:50, 8 June 2013
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	\| More money for [[public good]]s \|\| Benefit \|\| Some of the revenue collected through taxes is spent by governments on [[public good]]s -- goods that may be underprovided otherwise because of the [[free-rider problem]]. This is one of the principal justification of taxation and a justification for why some goods need to be funded by taxes rather than fees.<br>It is important to note that the term ''public good'' does not just mean a good provided by a government, so a public good justification for taxation needs to be examined in its particulars.		\| More money for [[public good]]s \|\| Benefit \|\| Some of the revenue collected through taxes is spent by governments on [[public good]]s -- goods that may be underprovided otherwise because of the [[free-rider problem]]. This is one of the principal justification of taxation and a justification for why some goods need to be funded by taxes rather than fees.<br>It is important to note that the term ''public good'' does not just mean a good provided by a government, so a public good justification for taxation needs to be examined in its particulars.
	\|-		\|-
	\| Money and in-kind help for some subgroups of the population \|\| Ambiguous \|\| Taxes may fund a welfare state, bailouts, and other forms of government spending on particular groups. Prima facie, there is no reason why such a transfer of wealth should generate a net social benefit or cost.<br>Arguments for the benefit typically rely on one or more of these: (i) the value of money is more for the recipients of welfare or bailouts than for net taxpayers, (ii) the government achieves some kind of efficiency in providing the services that wouldn't be possible through other means, or (iii) some form of an ethical argument such a equal opportunity or correcting past injustice. Conversely, arguments against such uses of taxes also hinge on questioning or reversing claims of the above sort, in addition to considering the distortion of incentives created by wealth transfers.		\| Money and in-kind help for some subgroups of the population \|\| Ambiguous \|\| Taxes may fund a welfare state, bailouts, and other forms of government spending on particular groups. Prima facie, there is no reason why such a transfer of wealth should generate a net social benefit or cost.<br>Arguments for the benefit typically rely on one or more of these: (i) the value of money is more for the recipients of welfare or bailouts than for net taxpayers, (ii) the government achieves some kind of efficiency in providing the services that wouldn't be possible through other means, or (iii) some form of an ethical argument such as equal opportunity or correcting past injustice. Conversely, arguments against such uses of taxes also hinge on questioning or reversing claims of the above sort, in addition to considering the distortion of incentives created by wealth transfers.
	\|}		\|}

Vipul: /* Classification based on nature of quantity being taxed */

2013-06-07T16:44:31Z

Classification based on nature of quantity being taxed

← Older revision		Revision as of 16:44, 7 June 2013
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	\| [[consumption tax]]: [[sales tax]] and [[value-added tax]] \|\| tax on consumption or purchase of items. The sales tax is a point-of-sale tax imposed at the final sale to the consumer, while the value-added tax is a tax imposed on the value added at every step of the production process.		\| [[consumption tax]]: [[sales tax]] and [[value-added tax]] \|\| tax on consumption or purchase of items. The sales tax is a point-of-sale tax imposed at the final sale to the consumer, while the value-added tax is a tax imposed on the value added at every step of the production process.
	\|-		\|-
	\| [[corporate tax]] \|\| tax on [firm]]s based on their net profits.		\| [[corporate tax]] \|\| tax on [[firm]]s based on their net profits.
	\|-		\|-
	\| [[wealth tax]] \|\| tax levied on the total wealth that an individual or household possesses. A special case is the [[estate tax]], which is levied when an individual dies and part of the individual's estate is taken by the government, the rest being distributed according to that individual's will or to the individual's heirs.		\| [[wealth tax]] \|\| tax levied on the total wealth that an individual or household possesses. A special case is the [[estate tax]], which is levied when an individual dies and part of the individual's estate is taken by the government, the rest being distributed according to that individual's will or to the individual's heirs.

Vipul: /* Optimal tax rates need not be revenue-maximizing */

2012-03-02T01:17:51Z

Optimal tax rates need not be revenue-maximizing

← Older revision		Revision as of 01:17, 2 March 2012
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	* Democratically elected leaders who need to face elections in a short period of time: Trade off between the benefits of greater tax revenues (which can then be spent on buying support or implementing popular programs) against the cost to approval ratings from high tax rates.		* Democratically elected leaders who need to face elections in a short period of time: Trade off between the benefits of greater tax revenues (which can then be spent on buying support or implementing popular programs) against the cost to approval ratings from high tax rates.

	Generally speaking, the optimal tax rate should not be ''more'' than the revenue-maximizing tax rate, but it may well be ''less''. ~~The exception~~ is when some democratically elected politicians are playing to popular dislike of specific groups (the rich, ethnic minorities, foreigners, etc.) by taxing them punitively. In practice, rationally self-interested politicians are likely to endorse high taxes on unpopular groups in rhetoric but not implement them in practice, and/or offer loopholes.		Generally speaking, the optimal tax rate should not be ''more'' than the revenue-maximizing tax rate, but it may well be ''less''. There are two kinds of exceptions: exceptions where the goal of taxation is not revenue but discouraging specific activities, and exceptions is when some democratically elected politicians are playing to popular dislike of specific groups (the rich, ethnic minorities, foreigners, etc.) by taxing them punitively. In practice, rationally self-interested politicians are likely to endorse high taxes on unpopular groups in rhetoric but not implement them in practice, and/or offer loopholes.

	==Ethics of taxation==		==Ethics of taxation==

Vipul: /* Ethics of taxation */

2012-02-17T04:17:21Z

Ethics of taxation

← Older revision		Revision as of 04:17, 17 February 2012
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	* One extreme is to view taxation as a violation of the [[self-ownership principle]] or of [[property right]]s. Taxation here is viewed as being similar to slavery, servitude, conscription, or confiscation of one's property, albeit not necessarily as bad as these.		* One extreme is to view taxation as a violation of the [[self-ownership principle]] or of [[property right]]s. Taxation here is viewed as being similar to slavery, servitude, conscription, or confiscation of one's property, albeit not necessarily as bad as these.
	* A middle position is to view taxation as a necessary evil to fund certain necessary government programs, but with the view that if it were possible for these programs to not be necessary, or to be funded in other ways, then taxation would indeed be immoral.		* A middle position is to view taxation as a necessary evil to fund certain necessary government programs (provision of [[public good]]s, maintenance of a safety net, etc. -- what government programs qualify as necessary is itself moot), but with the view that if it were possible for these programs to not be necessary, or to be funded in other ways, then taxation would indeed be immoral.
	* The other extreme is to view taxation as desirable in and of itself, either as a glue that holds society together, or as a means of ensuring democratic accountability, or as a mechanism to bring about equal opportunity.		* The other extreme is to view taxation as desirable in and of itself, either as a glue that holds society together, or as a means of ensuring democratic accountability, or as a mechanism to bring about equal opportunity.

Vipul: /* Optimal tax rates need not be revenue-maximizing */

2012-02-17T04:16:27Z

Optimal tax rates need not be revenue-maximizing

← Older revision		Revision as of 04:16, 17 February 2012
Line 100:		Line 100:

	Generally speaking, the optimal tax rate should not be ''more'' than the revenue-maximizing tax rate, but it may well be ''less''. The exception is when some democratically elected politicians are playing to popular dislike of specific groups (the rich, ethnic minorities, foreigners, etc.) by taxing them punitively. In practice, rationally self-interested politicians are likely to endorse high taxes on unpopular groups in rhetoric but not implement them in practice, and/or offer loopholes.		Generally speaking, the optimal tax rate should not be ''more'' than the revenue-maximizing tax rate, but it may well be ''less''. The exception is when some democratically elected politicians are playing to popular dislike of specific groups (the rich, ethnic minorities, foreigners, etc.) by taxing them punitively. In practice, rationally self-interested politicians are likely to endorse high taxes on unpopular groups in rhetoric but not implement them in practice, and/or offer loopholes.

			==Ethics of taxation==

			There are a number of different ethical views on taxation.

			* One extreme is to view taxation as a violation of the [[self-ownership principle]] or of [[property right]]s. Taxation here is viewed as being similar to slavery, servitude, conscription, or confiscation of one's property, albeit not necessarily as bad as these.
			* A middle position is to view taxation as a necessary evil to fund certain necessary government programs, but with the view that if it were possible for these programs to not be necessary, or to be funded in other ways, then taxation would indeed be immoral.
			* The other extreme is to view taxation as desirable in and of itself, either as a glue that holds society together, or as a means of ensuring democratic accountability, or as a mechanism to bring about equal opportunity.

Vipul at 04:11, 17 February 2012

2012-02-17T04:11:33Z

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