In Macroeconomics Income and Employment are interchangeable terms, since in the short-run National income depends on the total volume of employment or economic activity in the country. As income and employment are synonymous the employment theory is also called income theory.
It should be clear to readers that the classical economists did not formulate any specific theory of employment as such. They only laid down certain postulates which subsequently developed as a theory.
In Macroeconomics Income and Employment are interchangeable terms, since in the short-run National income depends on the total volume of employment or economic activity in the country. As income and employment are synonymous the employment theory is also called income theory.
It should be clear to readers that the classical economists did not formulate any specific theory of employment as such. They only laid down certain postulates which subsequently developed as a theory.
This paper investigates the relationship between tax structures and economic growth in a panel of developed and developing countries, using the new ICTD GRD. It sought to understand the effects of tax structure on GDP growth, since many previous studies have only focused on OECD countries.
It is also motivated by the IMF Policy prescription (IMF 2011), of on-going shift from reliance on trade taxes to VAT, especially in low income countries. It further sought to understand the implications of such structural shifts with studies showing that revenue recovery following trade liberalisation has been poor in low- and middle- income countries (Baunsgaard & Keen, 2010).
Results suggest that shifts away from trade and consumption toward income taxes have had a negative impact on GDP growth rates in developing countries. This negative effect is of greater magnitude through personal income taxes (PIC). Consequently, this study provides new evidence of potentially harmful effect of trade liberalisation on the GDP growth rates. The study also gives a clear picture of low tax reliance on indirect taxes between in low-income countries.
Revenue neutral shifts away from trade taxes to consumption taxes have no negative effect on growth. However, revenue neutral shifts towards income, specifically personal income taxes are potentially harmful to GDP growth rates. Key findings hold following the exclusion of resource-rich countries and after controlling for degree of openness.
Bill Beach, director of The Heritage Foundations' Center for Data Analysis, argues that a flat income tax or a consumption tax would resolve the unfairness and economic distortion of the current tax code. He delivered this presentation on October 22, 2009 at a meeting sponsored by the Naples Committee for Heritage.
Chapter1Introduction to Federal Taxation and Understanding theJinElias52
Chapter
1
Introduction to Federal Taxation and Understanding the Federal Tax Law
OBJECTIVES
After completing Chapter 1, you should be able to:
1. Identify types of taxes used by federal and state governments to raise revenues.
2. Understand the methods of tax collection and the trends shown by tax collection statistics.
3. Differentiate between tax avoidance and tax evasion.
4. Recall the underlying rationale of the federal income tax and its historical development.
5. Describe the route a tax bill takes until enacted into law.
6. Define the basic tax concepts and terms of federal income taxation.
INTRODUCTION
Federal taxation is the fuel by which Americans power their “Ship of State.” The tax structure which supports our federal government has gone from quill and ink records of revolutionary assessments to lightning speed computers which calculate and validate millions of income tax returns submitted by individuals and corporations. Federal taxes, in addition to the income tax, include a variety of other taxes covering estates, gifts, and customs, as well as excise taxes, and other minor categories of tax. Our governments can thus select among a variety of tax alternatives to produce the revenues required to operate national programs and carry out national policies.
Taxes are big business. Unfortunately, many business decisions are made in the United States today without regard to federal tax consequences. Individuals are concerned with personal income tax decisions and gift and estate tax decisions, while corporations concern themselves with corporate taxes, personal holding company taxes, and accumulated earnings tax decisions. Further, businesspersons must concern themselves with the choice of business entity: corporation, partnership, or S corporation. Differences in tax costs can be considerable. Advantages and disadvantages are virtually unlimited. This book presents information which is required knowledge if you make business decisions.
While most businesspersons (and many advisors) think about how to make decisions in nontax terms, the tax accountant bears the burden of introducing tax considerations. The topics presented in this book must be viewed in terms of decision-making—therefore, tax planning and tax research are of the utmost importance. Tax decisions are not made in a vacuum. Lawyers, accountants, financial managers, and a host of other experts work as a team in the decision-making process. This book is intended to serve as a guide for accounting students and for MBA students interested in gaining insight into and expertise in the tax complexities of business decision-making.
OVERVIEW
This chapter presents information on the magnitude of federal taxes collected and on taxpayer obligations. Then, a brief historical account is presented of federal tax collections prior to and after the adoption of the Sixteenth Amendment to the Constitution, which enabled Congress to levy “taxes on incomes, from whatever source derived.” Foll ...
Tax Foundation University 2017, Part 2: Understanding How Fiscal Changes Impa...Tax Foundation
This presentation examines how the tax system slows economic development and hampers international competitiveness.
It covers why getting the tax base right is at least as important as reducing the statutory tax rates, and examines alternative tax regimes.
It estimates what economic benefits might be attainable from a complete reform of the system, and comparea the results of going to a pure income tax versus a pure expenditure tax.
Please take the opportunity to view this presentation on why there are positives out there in the market, while looking at those that still concern us!
Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...Tax Foundation
This presentation reviews key considerations in tax reform – balancing revenues, growth, and tax equity.
Charts describe the current tax system, its general framework, progressive structure, complexity, biases, and distorting features.
It also explores who pays taxes, and how markets shift the tax burden.
NERI Seminar - An examination of Tax Shifting and "Harmful Taxes"NevinInstitute
There is a growing view that progressive taxes on personal and corporate incomes are “harmful,” that is, detrimental to growth and to employment. This “harmful taxes” view has developed into a formidable intellectual argument to shift taxes from profits and incomes to consumption, based on a particular hierarchy of taxes.
The advocates of “harmful taxes” may be a conservative reaction against the growing public unease with increasing, secular inequality, the payment of little or no taxes by some of the richest people in the world and widespread, tax avoidance by some of the world’s most profitable and powerful multinationals.
The counterview in this seminar and paper is that the “harmful taxes” view prioritises one key principle of taxation over another. It prioritises efficiency over equity. It is also a contested viewpoint both from a principles of taxation viewpoint and on its main assertion of economic efficiency.
Tax Foundation University 2017, Part 3: Modeling Tax Changes — Which Help, Wh...Tax Foundation
This lecture explores how the consequences of policy options can be determined and why they should guide the reform effort. The Tax Foundation's Taxes and Growth Dynamic Tax Model will be demonstrated.
Also discussed: the benefits and limitations of dynamic vs. static analysis and scoring of tax changes, which tax features harm growth the most, which potential reforms help the most, and which revenue offsets hurt the least. Differing views of how to predict the effects of tax changes on economic growth, how different models view the effect of the federal budget deficit and the Federal Reserve on the outcomes, and the proper role of monetary policy.
Register for Tax Foundation University Online here: https://taxfoundation.org/tax-foundation-university-remote/#enroll
Evaluating a Sluggish Economy with Bruce YandleMercatus Center
In the first half of 2016, the US economy skirted close to recession territory but so far has registered positive growth. What are the major forces that seem to be driving the slow-growth economy? Is the economy getting stronger? Or, will we hit recession territory before the end of the year?
The Affordable Care Act fundamentally changed the landscape of the U.S. health care system. With more than five years since the law’s passage, questions remain about how to fix a system that remains broken despite recent reform efforts. Did the Affordable Care Act adequately reform a failing health system, or did that prescription only treat the symptoms of a much larger illness?
With nearly a trillion dollars at stake and draft legislation in development, now is the time for policymakers to free spectrum for innovative 21st century use. In order for 21st century technologies like the sharing economy and the Internet of Things to reach their full potential, and drive economic opportunity, more spectrum must be made available. Federal spectrum reallocation is a win-win-win scenario for the economy, social well-being, and the government.
Buchanan Speaker Series: Education, Inequality, and IncentivesMercatus Center
The F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics welcomed Roland G. Fryer, Jr., the Henry Lee Professor of Economics at Harvard University and faculty director of the Education Innovation Laboratory, for the inaugural Buchanan Speaker Series event on “Education, Inequality, and Incentives.”
Modernizing Freight Rail Regulation: Recommendations from the TRB StudyMercatus Center
In June 2015, the National Academy of Sciences’ Transportation Research Board issued a report with recommendations to update and modernize economic regulation of rail freight transportation. Jerry Ellig served as a member of the committee that prepared the report. This presentation, given to the National Industrial Transportation League’s Railroad Transportation Committee in November 2015, summarizes the report’s main recommendations. For a short narrative that explains the recommendations, see Dr. Ellig’s commentary in Real Clear Policy.
Modernizing the SSDI Eligibility Criteria: Trends in Demographics and Labor M...Mercatus Center
Social Security Disability Insurance program outlays have increased rapidly, roughly doubling in real terms over the past fifteen years.Participation in program (as % of labor-force) has doubled over the past twenty years. Determining the cause of this rapid rate of growth is essential for setting the program on a sustainable, long-term responsible path.
How Can Policymakers and Regulators Better Engage the Internet of Things? Mercatus Center
The world today is seemingly always plugged into the Internet and technologies are constantly sharing data about our personal and professional lives. Device connectivity is on an upward trend with Cisco estimating that 50 billion devices will be connected to the Internet by 2020. Collection and data sharing by these devices introduces a host of new vulnerabilities, raising concerns about safety, security, and privacy for policymakers and regulators.
Amid concerns about government data security, like the recent OPM breach, Congress is considering cybersecurity information sharing legislation. But will a new information sharing program bolster federal information security? If not, what should be done instead?
Tools for Tracking the Economic Impact of LegislationMercatus Center
Laws passed by Congress impact the economy, but Congress has no systematic way to comprehensively track and assess the economic impact of legislative actions. This is especially difficult when laws empower federal agencies to regulate. While the current budget process scores and tracks the economic impact of spending and taxes, it does not account for the economic consequences of regulation.
The Sharing Economy: Perspectives on Policies in the New EconomyMercatus Center
The sharing economy’s rapid rise has transformed how many people work and live, from commuting, shopping, eating, vacationing, and even borrowing money. Firms like Uber, Lyft, and Airbnb seem to be grabbing headlines on a daily basis as they grow into billion-dollar ventures, disrupt local businesses, and create new policy questions for regulators.
To help shed light on these issues, the Mercatus Center at George Mason University invites you to join Research Fellow Christopher Koopman for a Capitol Hill Campus presentation examining the economics and policy issues surrounding the sharing economy.
Sustaining Surface Transportation: Overview of the Highway Trust Fund and Ide...Mercatus Center
The current system of funding highways is unsustainable. Expansion of the use of the trust fund, coupled with decreased revenue from gas taxes, has resulted in the fund falling short of demand for funding.
Stephen C. Goss Presentation for Mercatus Center SSDI PanelMercatus Center
The Social Security Disability Insurance (DI) trust fund’s projected 2016 depletion will require Congress to act soon to prevent large, sudden benefit cuts.
Experts on both sides of the aisle have noted that a “quick fix” of simply shifting payroll taxes from Social Security’s much larger retirement trust fund (OASI) into DI, without further reform, could cost Congress its last chance to solve Social Security’s broader financing problems before it is too late. What more responsible reform options are available?
The Mercatus Center and the Committee for a Responsible Federal Budget hosted a discussion on May 12 on how best to respond to SSDI’s financing crisis.
David Stapleton Presentation for Mercatus Center SSDI PanelMercatus Center
The Social Security Disability Insurance (DI) trust fund’s projected 2016 depletion will require Congress to act soon to prevent large, sudden benefit cuts.
Experts on both sides of the aisle have noted that a “quick fix” of simply shifting payroll taxes from Social Security’s much larger retirement trust fund (OASI) into DI, without further reform, could cost Congress its last chance to solve Social Security’s broader financing problems before it is too late. What more responsible reform options are available?
The Mercatus Center and the Committee for a Responsible Federal Budget hosted a discussion on May 12 on how best to respond to SSDI’s financing crisis.
Jason J. Fichtner Presentation for Mercatus Center SSDI PanelMercatus Center
The Social Security Disability Insurance (DI) trust fund’s projected 2016 depletion will require Congress to act soon to prevent large, sudden benefit cuts.
Experts on both sides of the aisle have noted that a “quick fix” of simply shifting payroll taxes from Social Security’s much larger retirement trust fund (OASI) into DI, without further reform, could cost Congress its last chance to solve Social Security’s broader financing problems before it is too late. What more responsible reform options are available?
The Mercatus Center and the Committee for a Responsible Federal Budget hosted a discussion on May 12 on how best to respond to SSDI’s financing crisis.
5. Who pays ALL federal taxes? (SS, too) Source: CBO
6. Who pays federal taxes? (details) Year Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile Top 10% Top 5% Top 1% Average Pre-Tax Income for All Households, by Household Income Category, 2005 2005 15,900 37,400 58,500 85,200 231,300 339,100 520,200 1,558,500 Tax Rates, All Federal Taxes, percent 2005 4.3 9.9 14.2 17.4 25.5 27.4 28.9 31.2 Total Federal Taxes paid, dollars 2005 684 3,703 8,307 14,825 58,982 92,913 150,338 486,252 Source: Congressional Budget Office. Notes: Income equals pretax cash income plus all in-kind benefits (Medicare, Medicaid, food stamps, school lunches and breakfasts, etc.).