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A simpler consumption-based alternative to the income tax for socialist economies in transition (Inglês)

The tax systems of socialist economies in transition will distort resource allocation, create inequities, and cause administrative headaches if not reformed. These countries have weak tax administrations, lack experience with mass taxes based on voluntary compliance, and need to encourage domestic saving and foreign investment. This article suggests an alternative to the conventional income tax that is more suited to these conditions. Attempting to tax real economic income raises complicated timing issues and may require complex adjustments for inflation. The simplified alternative tax (SAT) avoids these complications and provides a general incentive for saving and investment less subject to abuse or distortions than tax holidays and other tax gimmicks in vogue in countries emerging from socialism. The key elements of the SAT are separate taxes on income from labor and capital, immediate deduction for all business expenditures, no deduction for interest, and no taxation of interest or dividends. Although the marginal effective tax rate is zero, the government shares in extraordinary returns to investment. The article discusses potential problems as well as advantages of the SAT.

Detalhes

  • Autor

    McClure, Charles E., Jr.

  • Data do documento

    1992/07/31

  • TIpo de documento

    Artigo de revista

  • No. do relatório

    14082

  • Nº do volume

    1

  • Total Volume(s)

    1

  • Data de divulgação

    1999/10/21

  • Nome do documento

    A simpler consumption-based alternative to the income tax for socialist economies in transition

  • Palavras-chave

    general agreement on tariffs and trade;decommissioning of nuclear power plant;inflation adjustment;marginal effective tax rate;double taxation of dividends;tax treatment of dividend;taxation of interest income;generally accepted accounting practice;manipulation of transfer prices;excess foreign tax credit;treatment of capital gains;ceilings on interest rates;high rates of inflation;form of privatization;interest on government debt;Socialist economies;tax system;weak tax administration;return to investment;conventional income tax;nominal interest rate;incentives for investment;adjustments for inflation;countries in transition;original issue discount;income from business;border tax adjustment;long gestation period;global income tax;value added tax;types of income;real interest rate;income tax return;basic tax reform;income tax policy;concentration of wealth;income tax levy;tax on interest;risk of fraud;sale of asset;income from capital;tax on income;high tax rate;payment of interest;statutory tax rate;income tax base;compensation for loss;individual income tax;company income tax;national tax journal;income tax reform;capital income taxation;tax on imports;repayment of debt;tax collector;income tax model;calculation of income;mobility of capital;absence of tax;corporate tax rate;deduction for investment;company tax rate;taxation of labor;rate of growth;tax loss;market economy;labor income;tax purpose;individual tax;business tax;depreciation allowance;tax liability;inflation rate;personal exemption;foreign-source income;Tax Holiday;state enterprises;business income;flat tax;taxable income;international issues;non-profit organization;domestic saving;inventory accounting;financial asset;aggregate income;command economy;government share;alternative tax;measuring income;industrial country;financial accounting;business loss;administrative resource;university press;tax implications;tax-exempt organization;liquidity problem;controlled price;price level;taxation base;depreciable asset;multinational corporation;administrative advantage;payroll tax;central planning;voluntary compliance;strip mines;free economy;grape vine;profit margin;taxpayer compliance;price index;socialist system;gross receipt;price stability;investment incentive;uniform tariff;long-term contract;market force;tax treaty;investment environment;purchase price;coffee tree;political opposition;inadequate capital;intangible benefit;radical reform;lease payment;fruit tree;shadow economy;administrative problem;income statement;international aspect;depreciation deduction;real value;profit taxation;relative price;tax equity;income flow;real loss;administrative consideration;interest deduction;interest expenses;expenditure tax;existing debt;guinea pig;transition period;private ownership;state ownership;lack experience;business performance;extraordinary profits;political problem;corporate income;quantitative assessment;international center;world tax;send money;tax rebate;company taxation;present value;public economics;measure of use;treasury department;fiscal incentive;research observer;stable price;international congress;law review;turnover tax;tax saving;silent partner;tax revenue;economic distortion;targeted incentive;transitional economy;holding company;initial investment;deductible expense;tax law;compound interest;mortgage interest;planned economy;marginal rate;tax shelter;enterprise share;public borrowing;flat-rate tax;private investor;Natural Resources;business expenditure;financial investment;Cash flow;home mortgage;redemption value;risk taking;private investment;capital asset;special tax;financial intermediaries;business returns;tax consequence;accrual taxation;debt finance;tax incentive;budget revenue;vertical equity;equal share;administrative burden;differential treatment;windfall gain;outstanding debt;debt capital;graduate tax;equity income;

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