Present Law and Analysis Relating to Individual Retirement Arrangements

[Excerpt] The House Committee on Ways and Means, Select Revenue Measures Subcommittee, has scheduled a public hearing to take place on June 26, 2008, on the role of individual retirement arrangements (“IRAs”) in our retirement system. The hearing is scheduled to focus on the recently issued report by the Government Accountability Office (GAO), entitled “Individual Retirement Accounts, Government Actions Could Encourage More Employers to Offer IRAs to Employees,” June 2008; the role of IRAs in our retirement system; and legislative proposals for automatic IRA enrollment. This document,1 prepared by the staff of the Joint Committee on Taxation, includes a description of present law and analysis relating to IRAs

Do Mobile Pensioners Threaten the Deferred Taxation of Savings?

We investigate optimal taxation of lifetime income with and without an emigration option during old age. The government sets the rates of deferred taxation and of possibly reduced taxation of interest. If agents are immobile, the optimal policy consists in full deferral of income taxes on savings and a full taxation of interest. Mobility of the old calls for lower degrees of deferral and reduced taxation of interest. However, the optimum never entails full immediate taxation of savings in combination with full tax exemption on capital income.deferred taxation, income tax, savings, migration

Taxation

This Briefing Note examines the evolution of the tax burden over the last 50 years. It then looks at the proposals in the parties' manifestos. * Net taxes and National Insurance contributions have risen from 34.8% of national income in 1996ֹ7 to 36.3% in 2004ְ5. According to Treasury projections, these will rise to 38.5% of national income in 2008ְ9. This would be the highest level since 1984ָ5. * Total government revenues have averaged 38.4% of national income under the two Labour governments, compared with 40.6% over the 18 years of Conservative government from 1979 to 1997. According to Treasury forecasts, revenues will equal 39.3% of national income in 2005ְ6, rising to 40.6% by 2009ֱ0. This would be the highest level since 1988ָ9. * Over Labourҳ two parliaments since 1997, current receipts have risen by 3.5% a year on average, in real terms, while national income rose by 2.8% on average, leaving national income minus tax to rise at 2.4% on average. * Of the total ò8.5 billion revenue increase seen since 1996ֹ7, ñ9.1 billion was due to discretionary changes to the tax system, with the remainder being due to the impact of the economy on overall revenues. The largest discretionary change occurred in the first Budget after the 2001 election (the Spring 2002 Budget), which increased taxes to yield an additional ù.9 billion by 2005ְ6. * Between 1997 and 2005, the UK saw one of the highest increases in revenues among OECD countries, although the UK remains a low-tax economy compared with EU countries

Taxes in Europe Database

The Taxes in Europe database is the European Commission's on-line information tool covering the main taxes in force in the EU Member States. Access is free for all users. The system contains information on around 650 taxes, as provided to the European Commission by the national authorities. The "Taxes in Europe" database contains, for each individual tax, information on its legal basis, assessment base, main exemptions, applicable rate(s), economic and statistical classification, as well as the revenue generated by it. The information is listed in the form of a downloadable file. The "Taxes in Europe" database is not meant to constitute a reference for legal purposes. The "Taxes in Europe" database covers the following types of taxes: All main taxes in revenue terms. These include notably personal income taxes, corporate income taxes, value added taxes, excise duties; The main social security contributions. A list of minor taxes yielding less than 0.1% of GDP (not covered by the database) can be found here. The database does NOT cover information on Customs duties and tariffs. This type of information can be found in the customs tariff database TARIC.European Union, taxation, database

Purchase, circulation and fuel taxation

During the last decade, the UK and many other developed nations have reformed existing forms of road transport taxation to address a number of transport policy goals. This has involved modifying the design of purchase, circulation and fuel taxation to promote: • More fuel efficient vehicles • Alternative fuel vehicles • Cleaner fuels (lower emissions and/or low carbon) • Modal shift and traffic volume • Congestion reduction This chapter particularly explores the use of environmental taxation to promote Transport Demand Management (TDM) and identifies key principles of the design of such environmental taxes. It notes the importance of positioning a tax measure in relation to user decisions, its targeting and the threshold levels needed to provide a useful policy impact. Taxation measures considered include: • Initial vehicle purchase • ‘Circulation’ Tax on the ownership of vehicles • Tax on the use of vehicles It is concluded that purchase, circulation and fuel taxation can promote a variety of transport and environmental policy goals. It is important to distinguish between taxation measures to influence vehicle characteristics (technology, the type of fuel used and fuel economy) as opposed to the level vehicle use (TDM). Well designed purchase and circulation taxes can stimulate cleaner car technologies and fuels, but they are not an appropriate TDM measure. Road fuel duties are an effective general TDM measure but cannot be targeted on particular areas, times or for particular urban transport policy purposes. Road user charges can be targeted on such factors, and consequently, led by the established example of Singapore, followed by Norway and London, they are attracting much attention. The road transport taxation landscape is possibly set to change with many countries now seeing road user charges as potentially replacing the entire regime of transport taxation on purchase, ownership and fuel. But, rather than replacing fuel duties, evidence is mounting that to manage transport demand, road user charges need to be in addition to and not replace fuel and vehicle taxation. This may be a politically inconvenient truth, and the real challenge will be managing the transition towards an effective new transport taxation regime

Source versus Residence. A comparison from a New Economic Geography perspective

Recently, issues of international taxation have also been analysed from a New Economic Geography perspective. These discussions show that agglomerative forces play a non negligible role. In the paper, we introduce explicitly taxation into a Footloose Capital Model and compare implications of taxation according to the residence principle and the source principle from a New Economic Geography perspective. We confirm that agglomerative effects change the results substantially compared to the standard analysis and that the two taxation principles have different implications for industry agglomeration. (author's abstract)Series: Discussion Papers SFB International Tax Coordinatio

Yes, The Government Should Tax Soft Drinks: Findings from a Citizens’ Jury in Australia

Taxation has been suggested as a possible preventive strategy to address the serious public health concern of childhood obesity. Understanding the public’s viewpoint on the potential role of taxation is vital to inform policy decisions if they are to be acceptable to the wider community. A Citizens’ Jury is a deliberative method for engaging the public in decision making and can assist in setting policy agendas. A Citizens’ Jury was conducted in Brisbane, Australia in May 2013 to answer the question: Is taxation on food and drinks an acceptable strategy to the public in order to reduce rates of childhood obesity? Citizens were randomly selected from the electoral roll and invited to participate. Thirteen members were purposively sampled from those expressing interest to broadly reflect the diversity of the Australian public. Over two days, participants were presented with evidence on the topic by experts, were able to question witnesses and deliberate on the evidence. The jurors unanimously supported taxation on sugar-sweetened drinks but generally did not support taxation on processed meats, snack foods and foods eaten/ purchased outside the home. They also supported taxation on snack foods on the condition that traffic light labelling was also introduced. Though they were not specifically asked to deliberate strategies outside of taxation, the jurors strongly recommended more nutritional information on all food packaging using the traffic light and teaspoon labelling systems for sugar, salt and fat content. The Citizens’ Jury suggests that the general public may support taxation on sugar-sweetened drinks to reduce rates of obesity in children. Regulatory reforms of taxation on sugar-sweetened drinks and improved labelling of nutritional information on product packaging were strongly supported by all members of the jury. These reforms should be considered by governments to prevent childhood obesity and the future burden on society from the consequences of obesity

Constraints on profit income distribution and production efficiency in private ownership economies with Ramsey taxation

In economies with Ramsey taxation, decreasing returns to scale, and private ownership, we show that second-best production efficiency is desirable when profit tax rates vary across groups of firms provided that the institutional rules which define profit incomes of consumers depend on the distribution of profits across these groups of firms. The classic results of Dasgupta and Stiglitz [1972] (of firm-specific profit taxation) and Diamond and Mirrlees [1971] and Guesnerie [1995] (of uniform one-hundred percent profit taxation) follow as special cases of our model. Moreover, second-best analysis suggests the desirability of proportionate taxation of inter-firm transactions in the absence of profit taxes. Alternatively, it recommends profit taxation as a perfect substitute for intermediate-input taxation. The analysis also suggests that, combined with the knowledge of the distribution of profit incomes in the economy, profit taxation can promote both efficiency and redistributive objectives of the government.Ramsey taxation, private ownership, prot taxation, production ineciency, general equilibrium.

New evidence on taxes and portfolio choice

Identifying the effect of differential taxation on portfolio allocation requires exogenous variation in marginal tax rates. Marginal tax rates vary with income, but income surely affects portfolio choice directly. In systems of individual taxation – like Canada’s – couples with the same household income can face different effective tax rates on capital income when labor income is distributed differently within households. Using this source of variation we find statistically significant but economically modest responses to taxation. In a “placebo” test, using data from the U.S. (which has joint taxation), we find no effect of the intra-household distribution of labor income on portfolios

International Taxation and Multinational Firm Location Decisions

Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms. Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of parent country taxation is estimated to be relatively large, possibly reflecting its international discriminatory nature. For the cross-section of multinational firms, we find that parent firms tend to be located in countries with a relatively low taxation of foreign-source income. Overall, our results show that parent-country taxation – despite the general possibility of deferral of taxation until income repatriation – is instrumental in shaping the structure of multinational enterprise.corporate taxation, dividend withholding taxation, location decisions