Tax avoidance, tax evasion, and tax flight: Do legal differences matter?

Although from an economic point of view, legal considerations apart, tax avoidance, tax evasion and tax flight have similar effects, namely a reduction of revenue yields, and are based on the same desire to reduce the tax burden, it is likely that individuals perceive them as different and as unequally fair. Overall, 252 fiscal officers, business students, business lawyers, and entrepreneurs produced spontaneous associations to a scenario either describing tax avoidance, tax evasion, or tax flight, and evaluated it as positive, neutral or negative. The results indicate that social representations differ with respect to tax avoidance, tax evasion, and tax flight. Tax evasion was perceived rather negatively, tax flight neutrally, and tax avoidance positively. Tax knowledge was found not to be correlated neither with tax avoidance nor with tax evasion.tax evasion; social representations; tax knowledge

MACHINERY REPLACEMENT, MULTIPLE OPTIMA, AND THE 1986 TAX REFORM ACT

The 1986 Tax Reform Act established a first year $10,000 expensing option and, for most farm equipment, a 7-year depreciation schedule. Under a profit maximization criterion, these tax law features can lead to multiple optima dependent upon discount and marginal tax rates. For example, the economically efficient time to reinvest under a 2 percent after tax discount rate is at 4, 8, and 30 years for the grower in a 33 percent tax bracket. Thus, the profit maximization behavioral rule needs to be supplemented with knowledge about a farmer's objectives in order to select the "correct" optimal reinvestment interval.Political Economy,

Individual taxpayer assessment performance under self- assessment system in Malaysia

The revert from the Official Assessment System (OAS) to the Self-Assessment System (SAS) in Malaysian tax system beginning year 2004 for individual taxpayers, forces taxpayers to perform the primary function of SAS i.e. income assessment task previously carried out by trained tax officers. The primary function is related to determining the correct amount of tax liability and getting the tax return accurate. Hence, the successful implementation of SAS relies heavily on the acceptance and cooperation of taxpayers. This study serves to evaluate the income assessment performance of taxpayers and its influential factors. Using Libby’s (1995) Antecedents and Consequences of Knowledge model as the underlying framework, this study examines the effect of factors such as knowledge in taxation, complexity of tax laws, attitude towards paying tax, probability of being detected, taxpayer assistance, general problem solving ability, experience and demographic variables on taxpayer assessment performance. Due to the nature of variables in this study which intends to elicit self ability and knowledge of a particular individual, a quasi-experimental design were chosen as the data collection method. In order to get the involvement from the real taxpayers, this study employs purposive sampling frame by choosing the UUM KL masters students. The results of this study provide empirical evidence that in order to perform their responsibilities well, taxpayers must possess knowledge in taxation. The relationship of knowledge and performance has been examined in the context of experts such as auditors and tax professionals. This study reveals that this relationship also exist in the context of novice, nevertheless the role of knowledge in the expert and novice model is slightly different due to the different nature of expert and novice knowledge

Effects of differential taxation on factor accumulation and growth

In this paper we try to analyze the role of fiscal policy in fostering a higher participation of the different production factors in the human capital production sector in the long-run. Introducing a tax on physical capital and differentiating both a tax on raw labor wage and a tax on skills or human capital we also attempt to present a way to influence inequality as measured by the skill premium, thus trying to relate the increase in human capital with the decrease in income inequality. We will do that in the context of a non-scale growth model. The model here is capable to alter the shares of private factors devoted to each of the two production sectors, final output and human capital, and affect inequality in a different way according to the different tax changes. The simulation results derived in the paper show how a human capital (skills) tax cut, which could be interpreted as a reduction in progressivity, ends up increasing both the shares of labor and physical capital devoted to the production of knowledge and decreasing inequality. Moreover, a raw labor wage tax decrease, which could also be interpreted as an increase in the progressivity of the system, increases the share of labor devoted to the production of final output and increases inequality. Finally, a physical capital tax decrease reduces the share of physical capital devoted to the production of knowledge and allows for a lower inequality value. Nevertheless, none of the various types of taxes ends up changing the share of human capital in the knowledge production, which will deserve our future attention.tax reform, inequality, human capital

Achieving an Efficient and Fair Equilibrium Through Taxation

It is well known that a game equilibrium can be far from efficient or fair, due to the misalignment between individual and social objectives. The focus of this paper is to design a new mechanism framework that induces an efficient and fair equilibrium in a general class of games. To achieve this goal, we propose a taxation framework, which first imposes a tax on each player based on the perceived payoff (income), and then redistributes the collected tax to other players properly. By turning the tax rate, this framework spans the continuum space between strategic interactions (of selfish players) and altruistic interactions (of unselfish players), hence provides rich modeling possibilities. The key challenge in the design of this framework is the proper taxing rule (i.e., the tax exemption and tax rate) that induces the desired equilibrium in a wide range of games. First, we propose a flat tax rate (i.e., a single tax rate for all players), which is necessary and sufficient for achieving an efficient equilibrium in any static strategic game with common knowledge. Then, we provide several tax exemption rules that achieve some typical fairness criterions (such as the Max-min fairness) at the equilibrium. We further illustrate the implementation of the framework in the game of Prisoners' Dilemma.Comment: This manuscript serves as the technical report for the paper with the same title published in APCC 201

Environmental Levies and Distortionary Taxation: Pigou, Taxation, and Pollution

Bovenberg and de Mooij (1994) showed that, in the presence of preexisting distorting taxes, the optimal pollution tax typically lies below social marginal damages. Many have viewed this result as a refutation of the so-called double dividend hypothesis,' which suggests that a tax on pollution can both improve the environment and reduce distortions in the tax system. Bovenberg and de Mooij's paper triggered a large literature on optimal environmental tax rates in a second-best world. In this note, I argue that the emphasis on tax rates is misguided. Using an analytical general equilibrium model, I show that for reasonable parameter values, an increase in tax distortions (arising from an increase in required tax revenues) leads to a fall in the optimal Pigouvian tax rate even while environmental quality improves. In general, knowledge of the direction of changes in optimal environmental tax rates due to changes in the economy is not sufficient for understanding the impact on environmental quality.

What Do Americans Think about Federal Tax Options to Support Public Transit, Highways, and Local Streets and Roads? Results from Year Eight of a National Survey

This report summarizes the results of the eighth year of a national random-digit-dial public opinion poll asking 1,201 respondents if they would support various tax options for raising federal transportation revenues, with a special focus on understanding support for increasing revenues for public transit. Ten specific tax options tested were variations on raising the federal gas tax rate, creating a new mileage tax, and creating a new federal sales tax. Other questions probed perceptions related to public transit, including knowledge and opinions about federal taxes to support transit. In addition, the survey collected data on standard sociodemographic factors, travel behavior (public transit usage, annual miles driven, and vehicle fuel efficiency), respondents’ views on the quality of their local transportation system, and their priorities for government spending on transportation in their state. All of this information is used to assess support levels for the tax options among different population subgroups. The survey results show that a majority of Americans would support higher taxes for transportation – under certain conditions. For example, 78% of respondents supported a gas tax increase of 10¢ per gallon to improve road maintenance, whereas support dropped to just 36% if the revenues were to be used more generally to maintain and improve the transportation system. For tax options where the revenues were to be spent for undefined transportation purposes, support levels varied considerably by what kind of tax would be imposed, with a sales tax much more popular than either a gas tax increase or a new mileage tax. With respect to public transit, the survey results show that most people want good public transit service in their state. In addition, 68% of respondents supported spending gas tax revenues on transit and 48% supported raising the gas tax specifically to pay for transit. Also, not all respondents were well informed about how transit is funded, with only 58% knowing that fares do not cover the full cost of transit

Pengaruh Faktor Pendidikan, Pengalaman Kerja, dan Pelatihan terhadap Pengetahuan Aparatur Pajak Tentang Tax Avoidance (Studi Kasus pada Kantor Pelayanan Pajak Pratama Kebayoran Baru Tiga)

The purpose of this research in to know the influence of education, work experience, and training on tax employee\u27s knowledge about tax avoidance. This research is using the primary data from questionnaire. This research is using survey method and regression analysis testing. Sample of this research is 60 from KPP Kebayoran Baru Tiga tax employees.Variables for this research are education, work experience, and training on tax employee\u27s knowledge about tax avoidance. The first step on the research is testing a reliability and validity of each variabel. And then the second step is regression testing of three variables on tax employee\u27s knowledge about tax avoidance. And the third step with a classic assumption test.Based on the results research shows that education influence significant on tax employee\u27s knowledge about tax avoidance. The results of the work experience no significant effect on tax employee\u27s knowledge about tax avoidance. Whereas training influence significant on tax employee\u27s knowledge about tax avoidance

The hidden burden of the income tax: Compliance costs of German individuals

We analyze the compliance costs of individual taxpyers resulting from the German income tax. using survey data that has been raised between December 2008 and April 2009, we find evidence for a considerably higher cost burden of self-employed taxpaxers. Taxable income and the demand for external support are positively correlated with compliance costs, while the time effort of female taxpayers is significantly lower. We also find evidence for a positive correlation of education and tax knowledge with the compliance burden. By contrast, a joint assessment of a married couple seems to reduce the monetized time effort. The aggregated cost burden of German income taxpayers amounts to 6.1-7.2 billion €, respectively 3.2-3.7 % of the income tax revenue in 2007. This estimate is higher than latest projections in a number of other European countries like Spain and Sweden, but significantly lower than results for the United States and Australia. --tax complexity,tax compliance costs,compliance burden,red tape,personal income tax