Why Does the Government Impose Taxes on Individuals and Businesses

1 FIAS. 2009. « Taxation as State Building: Reforming Tax Systems for Political Stability and Sustainable Economic Growth ». Weltbankgruppe, Washington, DC. 2 Unternehmenserhebungen der Weltbank (www.enterprisesurveys.org). 3. Djankov, Simeon, Tim Ganser, Caralee McLiesh, Rita Ramalho et Andrei Shleifer. 2010. â Die Auswirkungen von Unternehmenssteuern auf Investitionen und Unternehmertum.â American Economic Journal: Macroeconomics 2 (3): 31â64.

4 Romer, Christina, und David Romer. 2010. « The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks. » American Economic Review 100: 763-801. 5 Huizinga, Harry et Luc Laeven. 2008. « International Profit Shifting within Multinationals: A Multi-Country Perspective. » Journal of Public Economics 92: 1164-82. 6 Nicodème, Gaëntan. 2008. « Körperschaftsteuer und wirtschaftliche Verzerrungen.â CESifo Working Paper 2477, CESifo Gruppe, München. 7 Hibbs, Douglas A.

et Violeta Piculescu. 2010. « Tax Tolerance and Tax Compliance: How the Government Influences the Profunity of Corporations to Enter the Unofficial Economy. » American Journal of Political Science 54(1): 18-33. 8 Dialogue fiscal international. 2007. « Taxation of small and medium-sized enterprises. » Document d’information pour la Conférence internationale sur le dialogue fiscal, Buenos Aires, octobre. 9 Fajnzylber, Pablo, William F. Maloney et Gabriel V. Montes-Rojas. 2011. âLa formalité améliore-t-elle la performance des micro-entreprises ? Evidence from the Brazilian SIMPLES programme.â Journal of Development Economics94 (2): 262-76.

10 Vogel, Richard. 2010. « Smart Tax Administration ». Economic premise (Banque mondiale) 36: 1â5. 11 Djankov, Simeon, Tim Ganser, Caralee McLiesh, Rita Ramalho et Andrei Shleifer. 2010. « L’impact des impôts sur les sociétés sur l’investissement et l’entrepreneuriat. » American Economic Journal: Macroeconomics 2 (3): 31-64.

12 Pontus Braunerhjelm et Johan E. Eklund. 2014. âTaxes, tax administrative burdens and start-ups.â KYKLOS 67 (February): 1â11. 13 OECD (Organisation for Economic Co-operation and Development). 2017. Comparative Information on the OECD and Other Developed and Emerging Economies. Paris, France: OECD.

14 IFC (International Finance Corporation). 2018. «Improved tax administration can increase private investment and boost economic development in Tajikistan.» International Finance Corporation, Washington, DC. 15 Symons, Susan, Neville Howlett and Katia Ramirez Alcantara. 2010. The impact of VAT compliance on businesses. London: PwC. 16 OECD (2014), Consumption Tax Trends 2014: VAT/GST and excise rates, trends and policy issues, OECD Publishing, Paris. 17 Graham Harrison and Russell Krelove 2005, VAT Refunds: A Review of Country Experienceâ IMF Working Paper WB/05/218, Washington D.C. 18 Keen M., Smith S., 2007, «VAT Fraud and Evasion: What Do We Know, and What Can Be Done?». Document de travail du FMI WP/07/31. 19 Es ist erwähnenswert, dass 28 Volkswirtschaften, die in Doing Business analysiert wurden, keine Mehrwertsteuer erheben.

20 OCDE (2006), Tax Administration in OECD and Selected Non-OECD Countries: Comparative Information Series (2006), Éditions OCDE, Paris. 21 Gupta, M., und V. Nagadevara. 2007. « Audit Selection Strategy for Improving Tax Compliance: Application of Data Mining Techniques. » Dans Foundations of E-Government, Hrsg. A. Agarwal und V. Ramana. Actes de la onzième Conférence internationale sur la gouvernance électronique, Hyderabad, Inde, 28-30 décembre.

22 Alm J. et McKee M., 2006, « Tax compliance as a coordination game », Journal of Economic Behavior & Organization, vol. 54 (2004) 297â312 23 Khwaja, M. S., R. Awasthi, J. Loeprick, 2011, « Risk-Based Tax Audits Approaches and Country Experiences », Banque mondiale, Washington, DC. As trade barriers are removed and capital becomes more mobile, the formulation of sound fiscal policies poses significant challenges for developing countries. The need to replace trade taxes with internal taxes is accompanied by growing concerns about the diversion of profits by foreign investors, which are currently not deterred by weak tax abuse provisions in tax legislation and inadequate technical training for tax auditors in many developing countries. A concerted effort to address these shortcomings is therefore of the utmost urgency. People tend to leave high-tax jurisdictions and move to areas with lower taxes 23-26. In response to an increase in California border tax rates, for example, 0.8% of residents who found themselves in the upper class left California in 2013.27 In 2016, 24 of the 25 states with the highest taxes had net emigration and 17 of the states with the lowest taxes had net immigration of 28.

Some also tax income or payroll, such as New York City, which taxes an income of up to 3.876 percent, the highest in the country, MacDonald says. Local taxes typically pay for services people use on a daily basis, such as K-12 public schools, transportation, police and fire departments, and garbage collection. Refund processes can be a major weakness of VAT systems. This view is corroborated by a study of VAT administration refund mechanisms in 36 economies around the world.17 Even in economies where refund procedures exist, businesses often find the process complex. The study examined the treatment of excess VAT credits by tax authorities, the volume of refund claims, the procedures followed by refund claimants and the time taken by tax authorities to process refunds. The study found that legal deadlines for reimbursements are crucial, but often not enforced in practice. Education could be one of the most deserving recipients of taxpayers` money. Governments attach great importance to the development of human capital, and education is at the heart of this development. Tax money is used to fund, establish and maintain the public education system. To promote economic growth and development, Governments need sustainable sources of financing for social programmes and public investment.

Programs that provide health, education, infrastructure and other services are important to achieving the common goal of a prosperous, functional and orderly society. And they demand that governments increase their revenues. Taxation does not only pay for public goods and services; It is also an essential part of the social contract between citizens and businesses. How taxes are collected and spent can determine the legitimacy of a government. Government accountability promotes the effective management of tax revenues and, more generally, sound public financial management.1 The new changes should theoretically encourage business investment. There is some evidence to support this expectation. For example, U.S. Business investment after the TCJA rose sharply: Real non-residential investment rose 5.9% in 2018, beating the forecast of 2.7% of 57.58% in 2017. Some researchers have argued that this growth in investment is less a reaction to tax cuts than to factors such as oil prices.59 Others noted significant growth in investment in non-oil sectors, such as equipment, software and intellectual property.60 An effective tax administration can help encourage companies to register formally, thereby broadening the tax base and increasing tax revenues. An unfair and capricious tax administration risks discrediting the tax system and reducing the legitimacy of the government. In many transition economies of the 1990s, the failure to improve tax administration in introducing new tax systems led to unequal tax collection, widespread tax evasion, and lower-than-expected tax revenues.10 This letter is not intended to be an exhaustive analysis of national personal and corporate taxation. Instead, it highlights some of the trade-offs policymakers face when deciding to raise or reduce taxes, as well as details on exemptions, credits and other subsidies.

The letter accompanies SIEPR`s Fall 2022 Tax Policy Forum. All governments need revenue, but the challenge is to choose carefully not only the level of tax rates, but also the tax base. Governments must also develop a tax compliance system that does not discourage taxpayers from participating. Recent business survey data from 147 economies show that companies view tax rates as one of the top five restrictions on their operations, and tax administration as one of 11.2 Companies in economies that perform better on «doing business» tax relief indicators tend to perceive both tax rates and tax administration. as a less significant barrier for businesses (Figure 1). Second, companies were encouraged to move their headquarters overseas to avoid paying U.S. dollars.