theories of taxation pdf

both theories is the distribution of the tax burden among individuals possessed of varying incomes. These theories of taxation may, accordingly, be classified as individual theories. It covers the advantages and disadvantages of alternative tax … the breakthrough of optimal tax theory (see, e.g., Atkinson and Stiglitz (1972, 1976), Sandmo (1974, 1976), and Sadka (1977)). THE PURE THEOEY OF TAXATION The theory of the inciilence of taxation . The design of an optimal tax policy , in a wide sense including all public services funde d with tax revenue, affects all members of a society. really . A country’s tax regime is a key policy instrument that may negatively or positively influence investment. '2 This definition is the accretion concept of income, which defines income as the sum of consumption and accumulation.13 Robert Haig published his definition of income in 1921, explaining income as follows: J.E. 1927] A CONTRIBUMON TO TE THEORY OF TAXATION 51 Z 4dx. THEscience of taxation coillprises two subjects to which the character of pure theory may be ascribed : the laws of incidence, and the principle of equal sacrifice. Google Scholar R. Musgrave and P. Musgrave, Public Finance in Theory and Practice, (New York: McGraw-Hill, 1989). Theories of Taxation which the government adopts should be equitable so that tax avoidance is decreased. Today the theoretical case for differentiated commodity taxes seems widely accepted, but at the same time there is a widespread A number of theories have been put forward by different economists explaining how justice in taxation can be achieved among which the following are important theories of taxation and are discussed as follows : The least-sacrifice theory, on the other hand, is a group theory of taxation. Tax Theories and Tax Reform early contribution of Georg von Schanz. Tax Policy in the PFI relates to the formulation of a tax strategy which is supportive to investment. Because . . Meade, The Meade Report on the Structure and Reform of Direct Taxation (London: George Allen & Unwin for the Institute of Fiscal Studies, 1978). . Least sacrifice is interpreted in the group sense. Tax morale is an interesting topic, as it allows to check to which extent it makes sense to extend economics with aspects from other social sciences as, e.g., social psychology or sociology. R and their solution is evidently given by dxl dx2 dxo 0<0 (4) x1 X2 i.e., the production of each commodity should be diminished in the same proportion. . together, the taxation of wealth transfers under any guise is qualitatively distinct from the taxation of wealth holdings, the latter having been examined in subsection 9.B.2 as a species of capital income taxation.2 1 On the use of such tax base defi nitions as if they were normative principles, see … The literature on optimal taxation typically treats the social planner as a utilitarian: that is, the social welfare function is … is an integral part of the general theory of Y~~u~."--~~ARsH.~LL. (7) It is interesting to extend these results to the case of a given revenue to be raised by taxing certain commodities only. Es says on the Theory of Optimal Taxation : An Overview Introduction Taxation is always a topical research topic, not least because of its policy relevance. The standard theory of optimal taxation posits that a tax system should be chosen to maximize a social welfare function subject to a set of constraints.

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