Tax reform
 | The examples and perspective in this articlemay not represent aworldwide viewof the subject.(December 2010) |
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Tax reformis the process of changing the waytaxesare collected or managed by the government and is usually undertaken to improve tax administration or to provide economic or social benefits.[1]Tax reform can include reducing the level of taxation of all people by the government, making the tax system moreprogressiveor less progressive, or simplifying the tax system and making the system more understandable or more accountable.
Numerous organizations have been set up to reform tax systems worldwide, often with the intent to reformincome taxesorvalue added taxesinto something considered moreeconomically liberal.Other reforms propose tax systems that attempt to deal withexternalities.Such reforms are sometimes proposed to be revenue-neutral, for example inrevenue neutrality of the FairTax,meaning they ought not result in more tax or less being collected.[2]Georgismclaims that various forms ofland taxcan both deal with externalities and improve productivity.
Australia[edit]
Tax reform was an increasingly significant issue on the Australian political agenda.[3][4]Combined annual deficits of theCommonwealthandState and territory governmentswill rise from 1.9% ofgross domestic productin 2011–12 to 5.9% of GDP by 2049–50.[5]Widespread, wholesale tax reform in Australia has not occurred since the introduction of theGoods and Services Taxin 2000. TheHenry Tax Reviewidentified 138 areas for significant reform to Australia's tax system over the next 10 to 20 years.
In July 2013,PricewaterhouseCoopersproposed significant tax reform in the context of anageing populationand slowing of theAustralian mining boom.[6]PricewaterhouseCoopers proposed improving the efficiency of the Australian tax system through analysing the competitiveness of the levels of taxation, its effect on production and the importance ofbroad-basedtaxes to reduceeconomic distortion.[7]For example, over 115 other taxes raise less revenue than one tax: the Goods and Services Tax.[8]This report received widespread coverage in the Australian press.[9][10][11][12]
United States[edit]
There have been many movements in theUnited Statesto reform the collection and management of taxes.
During the late 19th century, American economistHenry Georgestarted a global movement for tax reform. The aim of the movement was the abolition of all forms of taxation other than theSingle Taxon land value. The effects of the movement on taxation policy, although diminished, can be seen in many parts of the world including Australia, New Zealand, Hong Kong, Taiwan and Singapore.[citation needed]Efforts to promote this form of tax reform in the United States continue under the aegis of organizations such asThe Henry George Foundation of America.[13]
In 1986, landmark tax reform was passed in theTax Reform Act of 1986.In the 1990s, reform proposals arose over the double-taxation of corporate income, with a large report in 1992 by theInternal Revenue Service(IRS).[14]
During theBushadministration, thePresident's Advisory Panel for Federal Tax Reformrecommended the removal of theAlternative Minimum Tax.Several organizations are working for tax reform in theUnited StatesincludingAmericans for Tax Reform,Americans For Fair TaxationandAmericans Standing for the Simplification of the Estate Tax(ASSET). Various proposals have been put forth for tax simplification in the United States, including theFairTaxand variousflat taxplans and bipartisan tax reform proposals.[15]
In 2010,Fareed Zakariaproposed what he described as a "grand bargain"with tax reform for economic adversariesPaul KrugmanandNiall Ferguson;an attempt to bridge their political divide with the creation of a simple and indirectFederal Sales Tax.[16]RepresentativeChaka Fattahof Pennsylvania introduced a bill, H.R. 4646,[17]called theDebt Free America Actthat would introduce a 1%financial transaction taxand eliminate federal income tax. He has introduced bills calling for similar tax reform since 2004, but the bills have never made it out of committee.[18]
President Obama's tax reform proposals are highlighted in his administration's2013 United States federal budgetproposal and in a framework for corporate and international tax reform presented by the administration.[19]While some of these proposals have become irrelevant due to the “United States fiscal cliff”agreement at the end of calendar year 2012, these policies present a center-left approach to tax reform. In general, the proposals involve some marginal tax rate increases, some marginal tax rate decreases, and base broadening by closing, canceling, or limitingtax loopholes,deductions, credits, or othertax expendituresfor top income earners and corporations.
In December 2017, the Senate passed theTax Cuts and Jobs Act of 2017.[20]On December 22, 2017President Trumpsigned into law the tax reform bill passed by the House and Senate.[21]
The business community avidly lobbied in support of the bill, which included corporate tax cuts among more comprehensive reform. The National Retail Federation was a leading voice in this effort, since previously, retailers paid one of the highest corporate tax rates.[22][23]
Tax choice[edit]
Tax choice is the theory that taxpayers should have more control with how their individual taxes are allocated. If taxpayers could choose which government organizations received their taxes,opportunity costdecisions would integrate theirpartial knowledge.[24]For example, a taxpayer who allocated more of his taxes onpublic educationwould have less to allocate onpublic healthcare.Supporters argue that allowing taxpayers todemonstrate their preferenceswould help ensure that thegovernment succeedsat efficiently producing thepublic goodsthat taxpayers truly value.[25]
See also[edit]
- Organizations
- Americans For Fair Taxation
- Americans for Tax Reform
- Americans Standing for the Simplification of the Estate Tax
- FreedomWorks
- Peterson Institute for International Economics,Tax Reforms in Advanced Economies.
- Proposals
- FairTax
- Flat tax
- Hall-Rabushka flat tax
- Land value tax
- OneTax
- 9–9–9 Plan
- Automated Payment Transaction tax
- Kepner Income Tax
- Related concepts
References[edit]
- ^"Rao, S. (2014). Tax reform: Topic guide. Birmingham, UK: GSDRC, University of the Birmingham".8 December 2014.Retrieved19 February2016.
- ^"Revenue Neutral Law & Legal Definition".definitions.uslegal.Retrieved2015-08-21.
- ^Urensa, Dan (26 September 2013)."In a smaller world, tax reform is overdue".The Australian.Retrieved13 January2013.
- ^Glenday, James (16 August 2013)."Is it time to reform our 'struggling' tax system?".Australian Broadcasting Corporation.Retrieved13 January2013.
- ^"Protecting Prosperity: Why we need to talk about tax".PricewaterhouseCoopers.Retrieved13 January2013.
- ^Tax Reform: Why you should care(YouTube).PricewaterhouseCoopers.25 August 2013.
- ^"Protecting prosperity: Why we need to talk about tax"(PDF).PricewaterhouseCoopers.Archived fromthe original(PDF)on 2013-08-15.Retrieved13 January2013.
- ^"Protecting prosperity: Why we need to talk about tax"(PDF).PricewaterhouseCoopers.Archived fromthe original(PDF)on 2013-08-15.Retrieved13 January2013.
- ^McMahon, Stephen (23 July 2013)."Report calls on 'fundamental' tax reform to avoid ongoing budget deficits".News.au.Retrieved13 January2013.
- ^Burnham, Steve (13 November 2013)."Tax reform is essential to protect Australia's future, says PwC".Taxpayers Australia.Retrieved13 January2013.
- ^O'Dwyer, Kelly (13 November 2012)."Australia needs to get serious about tax reform".Australian Financial Review.Retrieved13 January2013.
- ^White, Andrew (23 July 2013)."Government debt to balloon without tax reform, warns PwC".The Australian.Retrieved13 January2013.
- ^"Henry George Foundation found to offer the only true basis of Economic Freedom and Social Justice".RetrievedOctober 1,2016.
- ^Fleenor P, Williams J. (2006).Options for Reforming the U.S. Corporate Income Tax.Tax Foundation.
- ^Salvaging a Domestic Agenda: Toward Bipartisan Tax ReformArchived2010-12-27 at theWayback Machine,Washington Monthly
- ^FAREED ZAKARIA GPS
- ^http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4646ih.txt.pdf111TH CONGRESS, 2D SESSION - Bill H.R. 4646, FEBRUARY 23, 2010
- ^"1% Transaction Tax".8 September 2010.
- ^Bickley, James. "Tax Reform: An Overview of Proposals in the 112th Congress." Congressional Research Service. 26 Oct. 2012.[1]
- ^Morgan, David; Becker, Amanda (December 1, 2017)."Senate approves major tax cuts in victory for Trump".Reuters.RetrievedDecember 2,2017.
- ^"Trump signs tax bill before leaving for Mar-a-Lago".CNN.December 22, 2017.RetrievedJanuary 8,2018.
- ^Roundup, A WSJ."What a Tax Overhaul Means for Your Industry".WSJ.Retrieved2018-11-13.
- ^Parmley, Suzette."National Retail Federation hails Senate's passage of tax reform bill".www2.philly.Retrieved2018-11-13.
- ^"Tax morale and conditional cooperation"(PDF).Archived fromthe original(PDF)on 25 May 2010.Retrieved3 January2013.
- ^"Do Earmarks Increase Giving to Government?"(PDF).Cbees.utdallas.edu. Archived fromthe original(PDF)on 3 March 2013.Retrieved3 January2013.
Further reading[edit]
- Rao, S. (2014).Tax reform: Topic guide.Birmingham, UK: GSDRC, University of Birmingham.
- Anderson, J. E. (2005).Fiscal Reform and its Firm-Level Effects in Eastern Europe and Central Asia,William Davidson Institute Working Papers Series wp800, William Davidson Institute at the University of Michigan.
- T.R. Reid (2017).A Fine Mess: A Global Quest for a Simpler, Fairer, and More Efficient Tax System.Penguin Press.ISBN978-1594205514.
External links[edit]
- Tax reformatCurlie
- The Tax Gapcollected news and commentary atThe Guardian
- Tax Evasion (international)atThe New York Times