Showing papers on "Tax reform published in 1971"

The economics of property taxes and land values

Abstract: Abstract Land values are explained by diminishing returns to a variable factor, structure, added to fixed land. The total cost minimizing structural density determined by land value, occurs where the marginal cost of increased density equals the average cost of structure plus land. Structural demand prices equal marginal costs in equilibrium determining land demands. A general equilibrium land price establishes the uses, prices and densities of structures. A simple method of calculating structure supply elasticity and the incidence and deadweight loss of property taxes is developed. Differing property tax rates are found to be efficient.

The Fiscal Importance of the Land Tax During the Ch'ing Period

Abstract: T HE land tax has been the mainstay of government finance in all agrarian countries. However, for a number of reasons (e.g., the difficulty of keeping tax records up-to-date, the absence of built-in flexibility of revenue in times of inflation, the increasing availability of other sources of revenue) the importance of the land tax relative to that of other taxes tends to decline over time. In Tokugawa Japan, for example, the Bakufu finance depended almost entirely on the land tax of its domain in the early years of the regime. Yet, about one half of its income came from sources other than agricultural taxes in the early I840's.1 In British India, moreover, land revenue constituted about 70 percent of total revenue of the central and states governments combined near the end of the eighteenth century; the proportion had declined to one third by the first decade of the present century.2 A similar trend also occurred in Ch'ing China, especially after the mid-nineteenth century.8 This essay assesses the change in fiscal importance of China's land tax in the last one and one half centuries of the Ch'ing dynasty (I644-I9II). This study will not only illustrate the quantitative change in the Ch'ing tax structure, but will also throw light on the nature of the Ch'ing land taxation and on the tax burden of the peasantry. In particular, if the real tax burden did not increase in the period under considerations, the traditional thesis that links the fall of the dynasty to the oppressiveness of the land tax burden needs to be reexamined.4 To evaluate the fiscal importance of any tax, it is necessary to assess the revenue produced at the same time by all other taxes. In the early part of the Ch'ing period taxes were all traditional ones, but after the Opium War (I840-42) and the Taiping Rebellion (i850-64) new taxes came into being and assumed an increasingly important role in government financing. The traditional taxes included the salt tax, the native customs, and the miscellaneous taxes, in addition to the land tax. The land tax generally had two component parts: the ti-ting tax (literally, "the land tax and the labor services combined") that was collected in silver, and the grain tax that was originally collected in kind but commonly converted into money payment in

The effects of changes in sales tax rates on retail prices

Abstract: Since Adam Smith wrote The Wealth of Nations in 1776, economists have derived many theories about sales tax incidence.1 The burdens of sales taxation have rested upon landlords,2 capitalist-entrepreneurs,3 factor owners,4 or consumers 5 in these theories. The empirical studies performed in the area of sales and excise tax shifting have not yielded consistent results either. Investigators of effects of the early U.S. state sales taxes interviewed retailers about their treatment of the new taxes.6 Answers varied from complete tax shifting onto consumers to com plete tax absorption by retailers.7 Popular opinion apparently believes that sales tax burdens are uni formly shifted onto consumers by retailers. Both retailers and custo mers point to the widespread practice of separate tax quotation and use of tax bracket schedules as evidence of such shifting.8 However, this evidence is not necessarily conclusive because retailers could be reducing their before tax prices and then adding the proper amount of tax — per schedule — to arrive at after tax prices.9 This study reports an attempt to utilize a different source of objec tive data on retail prices in order to observe price elfects of sales taxes.

Tax Payments and Electric Utility Prices

Abstract: ous taxes imposed on the utility with the tax burden presumably passed on to the consumers of utility services. Since taxes are deducted as a legitimate supply cost in the rate setting process to ascertain the permitted rate of return for a utility, the incidence is upon the consumer via higher prices for service.l The relationship between tax payments and utility prices by consumer classes has, however, been spared systematical empirical analysis. This failure to determine the link between utility taxes and prices leaves several interesting economic issues unexplored. For one, utilities can segregate their customers into user categories, charging each group a different price. We currently do not know which consumer groups feel the greatest impact of taxes levied on the electric utility. For another, the traditional view of public utility taxes denies accepted principles of taxation, the concept of price-elasticity of demand, or the assumption of profit maximization when it presumes that different sorts of taxes elicit the same price response. Given any degree of elasticity (a price-elasticity coefficient exceeding zero), the rational reaction to taxes based on total output or gross receipts would be to absorb part of

Taxation, Political Risk and Portfolio Selection

Abstract: In various analyses of the effect of income taxation on an investor's willingness to invest in assets whose rates of return are uncertain, it is an underlying assumption that the investor knows for certain the rates at which his income will be taxed.' The only uncertainty then attaches to the before-tax rates of return on the risky investments. This paper concentrates on cases where at the time of selecting a portfolio an investor has incomplete knowledge of the tax rates which will be effective in the future. This may be the situation in a parliamentary election year if rival parties are in favour of corporation income taxation and consumption taxation, respectively. In some countries uncertainty about tax rates may be a more permanent feature; for example, at all times there may be a non-zero probability of complete confiscation of investment profits. Under such circumstances the tax rate can appear as a random variable from an investor's point of view. In this way uncertainty about after-tax income can reflect uncertainty as to the tax rates which eventually will become effective-political risk-as well as uncertainty as to before-tax returns-commercial risk. The separation of political risk from commercial risk enables us to study the specific effects of uncertainty about the relevant tax rates when a portfolio decision is made.2 The measurement of political risk is a difficult problem since many measures of risk are associated with certain classes of utility functions and/or probability distributions.3 A non-zero variance of the tax rate is a sufficient and necessary condition for the existence of political risk. Representing changes in political risk in terms of changes in the variance of the tax rate is to be avoided, however, as such a representation would be legitimate only under rather restrictive assumptions. We define a change in political risk in terms of a corresponding change in a dispersion shift parameter which indicates the stretching or compression of the probability distribution of the tax rate around its expected value.4 When the value of the dispersion parameter changes,

Differences in Fiscal Capacity and Effort: Their Significance for a Federal Revenue-Sharing System.

Abstract: Under pending proposals for Federal revenue sharing, the region of state-local taxes or \"all general revenue\" to personal income in the respective states would be used as the basis for adjusting then allocations for relative fiscal effort. This seems to presume either that personal income data closely indicate the states' relative financing capability or that no better measures are possible. Both presumptions can be questioned. A recent study estimates each state's revenue capacity in terms of the prevailing state-local revenue system, and supplies related measures of its revenue effort. For numerous states, these effort findings differ materially from those resting on personal income data. Regular annual preparation of explicit revenue capacity figures (feasible at modest cost and effort) would permit sounder effort adjustments in revenue sharing and better interstate fiscal comparisons than are now possible.

Federal Tax Incentives for Regional Growth

Abstract: In recent years the federal government has recognized, and begun to respond to, the problem of regional poverty and unemployment. The beginning of the federal commitment to alleviating regional underdevelopment probably lies in the Employment Act of 1946, but it was not until the 1960 Presidential campaign that the poverty and depression of Appalachia were brought to national attention. Passage of the Area Redevelopment Act in 1961 established the principle that federal funds should be used to aid the growth of lagging regions. The regional nature of Appalachian underdevelopment was formally recognized in the Appalachian Regional Development Act of 1965, which established the Appalachian Regional Commission as a joint federalstate agency to coordinate development activities. In the same year Title V of the Public Works and Economic Development Act organized regional commissions for several other multistate regions1 of extensive poverty and high unemployment, and established the Economic Development Administration's responsibility for federal policy vis-a-vis smaller regions of poverty. In addition to serving as liaison between the states and the federal government, the six regional commissions and EDA have principally followed the policy of making selective grants for public facilities development in communications, transportation, health and education. One policy alternative that is frequently suggested is the use of federal tax abatement to spur regional

Taxation for Economic Growth

Abstract: New tax policy is needed in the 1970s to assume adequate economic growth and appropriate composition. Positive possibilities for tax reform include generating enough federal revenue for budget surpluses, using taxes to improve the productivity of education, reform of the property tax, revenue sharing, and user taxes.

Tax Treaties between the United States and Developing Countries: The Need for a New U. S. Initiative

Abstract: Whatever the legal character of this important step taken by the United Nations, it creates a situation which is awkward from the political as well as legal point of view. When the General Assembly at its 21st Session in 1966 considered the draft resolution introduced by 54 African and Asian states condemning the administration of the mandated territory of South West Africa by the Republic of South Africa and proposing its termination and take-over by the United Nations, most Members expressed disappointment in the ruling of the International Court of Justice of 1966. The purpose of the above observations has not been to deal with this disappointment from the political point of view. It has rather been to point to the fact that the majority judges failed to explore the historical background of the sacred trust of civilization, which might have tipped the precarious balance of the votes in a different direction. Even if it is admitted that the jurisdiction of the Court was confined to the consideration of the case from the point of view of the mandate system only, the statement of the Court relating to \"the sole juridical expression of the sacred trust of civilization\" is highly doubtful if not untenable in international law.

Towards a New Tax-Transfer System in Canada: An Analysis of the Changes Proposed in the White Papers on Income Security, Unemployment Insurance and Taxation

Abstract: Recent issues of the Canadian Tax Journal have included analyses of each of the federal governmment's three major programmes for reform of Canada's tax-transfer payment system. In this article, we pay particular attention to tax-like effects of the programmes and to issues that were important in the tax reform debate: questions of the impact on incentives for individuals to work, save, etc. In a number of instances, we examine the combined effects of the proposals from these points of view. Finally, we discuss the 'negative income tax' method as an alternative to some of the major components of the unemployment insurance and income security reforms.

An Evaluation of Tax Incentives for on-the-Job Training of the Disadvantaged.

Abstract: Training on the job, an important element in the formation of human capital, is a particularly promising objective of government policy for the disadvantaged who, because they require a variety of special services and arrangements, are costly to employ initially. Presently, under the NAB-JOBS program, the Federal Government meets the additional expenses of companies that contract to place disadvantaged workers in specified job-training slots. In the last several years, a number of students and legislators, concerned with the urgency and magnitude of the problem of poverty and alleged deficiencies of the present subsidy, analogize from the Investment Tax Credit, have urged that tax incentives be provided for on-the-job training of the disadvantaged.

Tax loss cattle investments

Abstract: The income tax advantages of cattle investments, and their use by nonfarm investors as a tax shelter, are examined in this study. A budgeted example is included showing that investors continue to realize positive returns, even after passage of the Tax Reform Act of 1969. Tax advantages in cattle investments are the greatest for taxpayers in the highest marginal income tax brackets.