Background/Objectives: The increased consumption of sugar sweetened beverages (SSBs) has been associated with risks of obesity, and corresponding risks of type 2-diabetes, cancer, and cardiovascular disease. In order to reduce the intake of these beverages, the South African government has recently introduced a tax on SSBs. Methods: This paper evaluates the economic and health impact of the recently introduced tax on sugar sweetened beverages in South Africa, by constructing a microsimulation model using the South African Income and Household Survey (IES 2010/11) as the main data set. Results and conclusion: The overall results indicate that a 10 % SSB tax will lead to a substantial reduction in consumption of carbonated soft drinks by about 27% and minor reductions in other SSB categories. Results also indicate that the 10% SSB tax can generate about ZAR 14.5 billion (USD 1.08 bn) in government tax revenue annually. In addition, simulation results show that the SSB tax would result in an average reduction in energy intake by 16.97 kj/person/day.
{"title":"The Economic and Health Impact of a Tax on Sugar Sweetened Beverages (SSBs) in South Africa","authors":"Charity Gomo, Laura Birg","doi":"10.2139/ssrn.3294281","DOIUrl":"https://doi.org/10.2139/ssrn.3294281","url":null,"abstract":"Background/Objectives: The increased consumption of sugar sweetened beverages (SSBs) has been associated with risks of obesity, and corresponding risks of type 2-diabetes, cancer, and cardiovascular disease. In order to reduce the intake of these beverages, the South African government has recently introduced a tax on SSBs. Methods: This paper evaluates the economic and health impact of the recently introduced tax on sugar sweetened beverages in South Africa, by constructing a microsimulation model using the South African Income and Household Survey (IES 2010/11) as the main data set. Results and conclusion: The overall results indicate that a 10 % SSB tax will lead to a substantial reduction in consumption of carbonated soft drinks by about 27% and minor reductions in other SSB categories. Results also indicate that the 10% SSB tax can generate about ZAR 14.5 billion (USD 1.08 bn) in government tax revenue annually. In addition, simulation results show that the SSB tax would result in an average reduction in energy intake by 16.97 kj/person/day.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"120 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117302602","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-10-15DOI: 10.15290/OOLSCPREPI.2018.53
Michal Radvan
There is no specific legal regulation of professional athletes in the Czech Republic. In practice, both individual players and team players are mostly self-employment. In case of team players, compared to the legal regulation in other European countries, it is quite unique. This article deals with the legal regulation of professional team players, especially in the area of taxation. It works with the hypothesis, stated in two judgments of the Supreme Administrative Court, that team players should tax their incomes by the personal incomes tax as self-employed persons, i.e. businessmen. In 2011, the Supreme Administrative Court stated that team players are not employees of their club and they should pay taxes as from independent activities. The Czech Financial Administration followed this decision and taxed these sportsmen as so called independent professions. The reason why this issue was reopened by the Supreme Administrative Court was the case of football player David Lafata, who got a business license (he became a businessman) as a footballer and claimed that playing football is not an independent profession, but real business. In both cases, the personal income tax base is created as the difference between income and expenditure. As mostly there are no real high expenditures, Czech legal regulation allows the lump sum expenses: in case of independent profession 40 %, but for business (in this very case) 60 %. The aim of the paper is to confirm or disprove the hypothesis stated above, analyzing existing legal regulation and case law, and offer solutions de lege ferenda.
{"title":"Czech Tax Heaven for Sportsmen","authors":"Michal Radvan","doi":"10.15290/OOLSCPREPI.2018.53","DOIUrl":"https://doi.org/10.15290/OOLSCPREPI.2018.53","url":null,"abstract":"There is no specific legal regulation of professional athletes\u0000in the Czech Republic. In practice, both individual players and\u0000team players are mostly self-employment. In case of team\u0000players, compared to the legal regulation in other European\u0000countries, it is quite unique. This article deals with the\u0000legal regulation of professional team players, especially in\u0000the area of taxation. It works with the hypothesis, stated in\u0000two judgments of the Supreme Administrative Court, that team\u0000players should tax their incomes by the personal incomes tax as\u0000self-employed persons, i.e. businessmen. In 2011, the Supreme\u0000Administrative Court stated that team players are not employees\u0000of their club and they should pay taxes as from independent\u0000activities. The Czech Financial Administration followed this\u0000decision and taxed these sportsmen as so called independent\u0000professions. The reason why this issue was reopened by the\u0000Supreme Administrative Court was the case of football player\u0000David Lafata, who got a business license (he became a\u0000businessman) as a footballer and claimed that playing football\u0000is not an independent profession, but real business. In both\u0000cases, the personal income tax base is created as the\u0000difference between income and expenditure. As mostly there are\u0000no real high expenditures, Czech legal regulation allows the\u0000lump sum expenses: in case of independent profession 40 %, but\u0000for business (in this very case) 60 %. The aim of the paper is\u0000to confirm or disprove the hypothesis stated above, analyzing\u0000existing legal regulation and case law, and offer solutions de\u0000lege ferenda.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"57 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129506930","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Continued automation and declines in low-skill shares of GDP have been widespread globally and linked to inequality. We examine the long-term, global consequences of policies that foster automation or address the distributional consequences of it, using a six-region global macro model. Results depend on whether welfare criteria are Rawlsian, emphasizing the performance of low-skill households, Benthamite, which aggregate pecuniary measures, capital-owner friendly, or simply based on real GDP. Even where automation delivers only bias against the low skilled, we find that the fostering it is a dominant strategy under all but the Rawlsian criterion. We then consider a post automation scenario in which worker displacement is significant, examining inequality constraining but balance-preserving fiscal interventions, such as tax-financed “earned income tax credits”. These generate only small international spillover effects and are for the most part not preferred under all criteria except the Rawlsian one.
{"title":"Automation, Taxes and Transfers with International Rivalry","authors":"R. Tyers, Yixiao Zhou","doi":"10.2139/ssrn.3251070","DOIUrl":"https://doi.org/10.2139/ssrn.3251070","url":null,"abstract":"Continued automation and declines in low-skill shares of GDP have been widespread globally and linked to inequality. We examine the long-term, global consequences of policies that foster automation or address the distributional consequences of it, using a six-region global macro model. Results depend on whether welfare criteria are Rawlsian, emphasizing the performance of low-skill households, Benthamite, which aggregate pecuniary measures, capital-owner friendly, or simply based on real GDP. Even where automation delivers only bias against the low skilled, we find that the fostering it is a dominant strategy under all but the Rawlsian criterion. We then consider a post automation scenario in which worker displacement is significant, examining inequality constraining but balance-preserving fiscal interventions, such as tax-financed “earned income tax credits”. These generate only small international spillover effects and are for the most part not preferred under all criteria except the Rawlsian one.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"65 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131420071","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines tax planning of married couples under separate taxation. A theoretical analysis uses a family decision-model with a household public good to show that the secondary earner might veto against tax planning if the realization of tax savings increases intra-household income inequality. The empirical analysis exploits a specific feature of the German tax system, which allows married couples to save taxes by deviating from the default symmetric payroll-tax treatment and assigning a favorable tax treatment to the primary earner and an unfavorable tax treatment to the secondary earner. Based on a representative random sample of individual tax files, the empirical results confirm the role of the income distribution. Opting for a tax-minimizing treatment is found to be less likely if this is associated with larger losses in the net income of the secondary earner. While this holds irrespective of which of the spouses has higher earnings, couples where the wife is the primary earner display a general reluctance to assign the favorable tax treatment to the wife.
{"title":"Tax Planning of Married Couples and Intra-Household Income Inequality","authors":"Thiess Buettner, Katharina Erbe, Veronika Grimm","doi":"10.2139/ssrn.3016803","DOIUrl":"https://doi.org/10.2139/ssrn.3016803","url":null,"abstract":"This paper examines tax planning of married couples under separate taxation. A theoretical analysis uses a family decision-model with a household public good to show that the secondary earner might veto against tax planning if the realization of tax savings increases intra-household income inequality. The empirical analysis exploits a specific feature of the German tax system, which allows married couples to save taxes by deviating from the default symmetric payroll-tax treatment and assigning a favorable tax treatment to the primary earner and an unfavorable tax treatment to the secondary earner. Based on a representative random sample of individual tax files, the empirical results confirm the role of the income distribution. Opting for a tax-minimizing treatment is found to be less likely if this is associated with larger losses in the net income of the secondary earner. While this holds irrespective of which of the spouses has higher earnings, couples where the wife is the primary earner display a general reluctance to assign the favorable tax treatment to the wife.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124392934","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The rules that govern the tax basis and, by extension, the holding period of property received by an acquired corporation in an acquisitive reorganization are an unlovely patchwork that emerged from major changes to the tax law in 1986 and 1988. They not only fail to provide clarity but also do not reflect the fact that the acquired corporation, to the extent it engages in post-reorganization activity pursuant to the overall plan of reorganization, is in substance the agent of the acquiring corporation. Congress should amend the reorganization provisions to reflect this circumstance.
{"title":"Asset Basis in Acquisitive Reorganizations: General Utilities Hangover","authors":"D. Hasen","doi":"10.2139/SSRN.3225351","DOIUrl":"https://doi.org/10.2139/SSRN.3225351","url":null,"abstract":"The rules that govern the tax basis and, by extension, the holding period of property received by an acquired corporation in an acquisitive reorganization are an unlovely patchwork that emerged from major changes to the tax law in 1986 and 1988. They not only fail to provide clarity but also do not reflect the fact that the acquired corporation, to the extent it engages in post-reorganization activity pursuant to the overall plan of reorganization, is in substance the agent of the acquiring corporation. Congress should amend the reorganization provisions to reflect this circumstance.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"100 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132210307","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies whether there is a relation between the operational efficiency measured through the Data Envelopment Analysis (DEA) models and the tax aggressiveness of the Brazilian public companies listed on B3 between the period of 2010 to 2015. The main hypothesis is that companies that are more operational efficient are in average less tax aggressive. Or, in other words, we predict that the less operational efficient companies have usually to engage in tax aggressiveness strategies more often. An efficiency score was calculated considering the outputs and inputs of the companies, classifying them according to the Data Envelopment Analysis (DEA) models to determine the relative company’s operational efficiency. The tax aggressiveness was measured by the difference between the Effective Tax Rates (ETR) and the average of ETR of companies from specifics economic sectors. Five relevant economic sectors were evaluated. A Data Panel model was estimated using the fixed effects. Considering the regression of all sectors, the results confirmed the hypothesis that companies that are more operational efficient in average tend to be less tax aggressive. However, when the samples were separated by sectors, only in the Energy and Textile Sectors this relation is significant.
{"title":"The Relation Between Operational Efficiency and Tax Aggressiveness in Brazil","authors":"Antonio Martinez, Eloy Paste Junior","doi":"10.2139/ssrn.3327787","DOIUrl":"https://doi.org/10.2139/ssrn.3327787","url":null,"abstract":"This paper studies whether there is a relation between the operational efficiency measured through the Data Envelopment Analysis (DEA) models and the tax aggressiveness of the Brazilian public companies listed on B3 between the period of 2010 to 2015. The main hypothesis is that companies that are more operational efficient are in average less tax aggressive. Or, in other words, we predict that the less operational efficient companies have usually to engage in tax aggressiveness strategies more often. An efficiency score was calculated considering the outputs and inputs of the companies, classifying them according to the Data Envelopment Analysis (DEA) models to determine the relative company’s operational efficiency. The tax aggressiveness was measured by the difference between the Effective Tax Rates (ETR) and the average of ETR of companies from specifics economic sectors. Five relevant economic sectors were evaluated. A Data Panel model was estimated using the fixed effects. Considering the regression of all sectors, the results confirmed the hypothesis that companies that are more operational efficient in average tend to be less tax aggressive. However, when the samples were separated by sectors, only in the Energy and Textile Sectors this relation is significant.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134584430","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article deals with one of the key intersections of federal tax law and administrative law: IRS rulemaking. The IRS makes rules that affect the public through regulations and subregulatory guidance. I first discuss the IRS process for issuing such guidance and the principal forms the IRS uses. I then discuss the administrative law concept of deference to agency statutory interpretations. In administrative law, the two key regimes for deference are Chevron deference and Skidmore deference. Chevron deference requires the court to defer to an agency interpretation in formal guidance when the statutory text being interpreted is ambiguous and the agency interpretation is a reasonable interpretation even though the court believes there is a more reasonable interpretation. In the IRS context, Chevron deference applies to Treasury Regulations. Skidmore deference requires the court to defer to an agency interpretation in subregulatory guidance to the extent that the interpretation is persuasive. (That Skidmore formulation may sound a bit odd, but I get into that in the article.) The nonmainstream discussion in the article has two interrelated components: First, Chevron does not apply to legislative regulations. Legislative regulations are regulations, exemplified in the tax area by the consolidated return regulations under § 1502, where Congress delegated to the IRS the power to make the law. Second, Chevron does apply to interpretive regulations--regulations which interpret the statutory text. Some authors assert that, if Chevron deference applies to give the interpretation the force of law, then the regulation is a legislative regulation with the APA requirements for legislative regulations--promulgation in the Federal Register and prospective application only. The same argument, presumably, would apply if Skidmore or any other deference is given to an IRS interpretation in subregulatory guidance, because by conferring deference the interpretation has the force of law. I disagree with those authors. I assert that a court adopting--deferring to, if you will--an agency interpretation of ambiguous statutory text does not transform interpretation into legislative rulemaking under the APA. Hence, for such agency interpretations promulgation in the Federal Register is not required and the interpretations can apply retroactively. The IRS usually does issue its formal interpretations in regulations subject to notice and comment, so that is not a key difference. But, IRS interpretive regulations can and often do have retroactive effect.
{"title":"IRS Guidance – Rulemaking and Deference to IRS Statutory Interpretation","authors":"John A. Townsend","doi":"10.2139/SSRN.3212060","DOIUrl":"https://doi.org/10.2139/SSRN.3212060","url":null,"abstract":"This article deals with one of the key intersections of federal tax law and administrative law: IRS rulemaking. The IRS makes rules that affect the public through regulations and subregulatory guidance. I first discuss the IRS process for issuing such guidance and the principal forms the IRS uses. I then discuss the administrative law concept of deference to agency statutory interpretations. In administrative law, the two key regimes for deference are Chevron deference and Skidmore deference. Chevron deference requires the court to defer to an agency interpretation in formal guidance when the statutory text being interpreted is ambiguous and the agency interpretation is a reasonable interpretation even though the court believes there is a more reasonable interpretation. In the IRS context, Chevron deference applies to Treasury Regulations. Skidmore deference requires the court to defer to an agency interpretation in subregulatory guidance to the extent that the interpretation is persuasive. (That Skidmore formulation may sound a bit odd, but I get into that in the article.) \u0000The nonmainstream discussion in the article has two interrelated components: First, Chevron does not apply to legislative regulations. Legislative regulations are regulations, exemplified in the tax area by the consolidated return regulations under § 1502, where Congress delegated to the IRS the power to make the law. Second, Chevron does apply to interpretive regulations--regulations which interpret the statutory text. Some authors assert that, if Chevron deference applies to give the interpretation the force of law, then the regulation is a legislative regulation with the APA requirements for legislative regulations--promulgation in the Federal Register and prospective application only. The same argument, presumably, would apply if Skidmore or any other deference is given to an IRS interpretation in subregulatory guidance, because by conferring deference the interpretation has the force of law. I disagree with those authors. I assert that a court adopting--deferring to, if you will--an agency interpretation of ambiguous statutory text does not transform interpretation into legislative rulemaking under the APA. Hence, for such agency interpretations promulgation in the Federal Register is not required and the interpretations can apply retroactively. The IRS usually does issue its formal interpretations in regulations subject to notice and comment, so that is not a key difference. But, IRS interpretive regulations can and often do have retroactive effect.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129363103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyses and describes which norms can be derived from the OECD’s and the EU’s work on preventing harmful taxation that influence how Singapore should design and administer its Development and Expansion Incentive (‘DEI’). This analysis is relief upon in reviewing the Forum on Harmful Tax Practice’s conclusion that the DEI is not harmful and the decision not to place Singapore on the EU’s list of non-cooperative jurisdictions; a decision that suggests that the Council of the European Union considers Singapore to have adequately implemented the minimum anti-BEPS standards, of which BEPS Action 5 is one. These verdicts are, in the present author’s view, perfectly defensible, but they are nonetheless hard to justify on the basis of the criteria that were supposedly applied by the FHTP and the Council of the European Union. Particularly on the standards of ‘transparency’ and the ‘substantial activity requirement’ it seems difficult to conclude on the basis of the relevant legal provisions in, for instance, the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86) or Singapore’s Income Tax Act, that the DEI is really sufficiently transparent and that the right substantial activities are required for the DEI. The present author, therefore, recommends the FHTP and the Council of the European Union to give much more insight as to why, and on which basis, the verdicts in the 2017 Progress Report were ultimately made and why the list of non-cooperative jurisdictions was drawn up as it was.
{"title":"Reviewing the OECD’s and the EU’s Assessment of Singapore’s Development and Expansion Incentive","authors":"F. Boulogne","doi":"10.2139/ssrn.3349404","DOIUrl":"https://doi.org/10.2139/ssrn.3349404","url":null,"abstract":"This paper analyses and describes which norms can be derived from the OECD’s and the EU’s work on preventing harmful taxation that influence how Singapore should design and administer its Development and Expansion Incentive (‘DEI’). This analysis is relief upon in reviewing the Forum on Harmful Tax Practice’s conclusion that the DEI is not harmful and the decision not to place Singapore on the EU’s list of non-cooperative jurisdictions; a decision that suggests that the Council of the European Union considers Singapore to have adequately implemented the minimum anti-BEPS standards, of which BEPS Action 5 is one. These verdicts are, in the present author’s view, perfectly defensible, but they are nonetheless hard to justify on the basis of the criteria that were supposedly applied by the FHTP and the Council of the European Union. Particularly on the standards of ‘transparency’ and the ‘substantial activity requirement’ it seems difficult to conclude on the basis of the relevant legal provisions in, for instance, the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86) or Singapore’s Income Tax Act, that the DEI is really sufficiently transparent and that the right substantial activities are required for the DEI. The present author, therefore, recommends the FHTP and the Council of the European Union to give much more insight as to why, and on which basis, the verdicts in the 2017 Progress Report were ultimately made and why the list of non-cooperative jurisdictions was drawn up as it was.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"05 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130637325","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A review of the tax changes in the Australian Federal Budget May 2018 as they apply to individuals and SMEs.
对2018年5月澳大利亚联邦预算中适用于个人和中小企业的税收变化进行审查。
{"title":"Federal Budget 2018–19 SME Tax Update: Tax Cuts for All","authors":"Justin Dabner","doi":"10.2139/ssrn.3253408","DOIUrl":"https://doi.org/10.2139/ssrn.3253408","url":null,"abstract":"A review of the tax changes in the Australian Federal Budget May 2018 as they apply to individuals and SMEs.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124376067","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the optimal direction of marginal income tax reform in the context of New Zealand, which recently reduced its top marginal income tax rate to one of the lowest in the OECD. A behavioural microsimulation model is used, in which social welfare functions are defined in terms of either money metric utility or net income. The model allows for labour supply responses to tax changes, in which a high degree of population heterogeneity is represented along with all the details of the highly complex income tax and transfer system. The implications of the results for specific combinations of tax rate or threshold changes, that are both revenue neutral and welfare improving, are explored in detail, recognising the role of distributional value judgements in determining an optimal reform.The potential impact of additional income responses is also examined, using the concept of the elasticity of taxable income. Results suggest, under a wide range of parameter values and assumptions, that raising the highest income tax rate and/or threshold, would be part of an optimal reform package.
{"title":"Microsimulation Analysis of Optimal Income Tax Reforms: An Application to New Zealand","authors":"J. Creedy, N. Gemmell, N. Hérault, Penny Mok","doi":"10.2139/ssrn.3184654","DOIUrl":"https://doi.org/10.2139/ssrn.3184654","url":null,"abstract":"This paper examines the optimal direction of marginal income tax reform in the context of New Zealand, which recently reduced its top marginal income tax rate to one of the lowest in the OECD. A behavioural microsimulation model is used, in which social welfare functions are defined in terms of either money metric utility or net income. The model allows for labour supply responses to tax changes, in which a high degree of population heterogeneity is represented along with all the details of the highly complex income tax and transfer system. The implications of the results for specific combinations of tax rate or threshold changes, that are both revenue neutral and welfare improving, are explored in detail, recognising the role of distributional value judgements in determining an optimal reform.The potential impact of additional income responses is also examined, using the concept of the elasticity of taxable income. Results suggest, under a wide range of parameter values and assumptions, that raising the highest income tax rate and/or threshold, would be part of an optimal reform package.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133896481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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