Integrating Income Tax and National Insurance: an interim report

Income Tax and National Insurance are now sufficiently similar that merging them appears to be a plausible option, yet still sufficiently different that integration raises significant difficulties. This paper surveys the potential benefits of integration - increased transparency and reduced administrative and compliance costs - and the potential obstacles, assessing the extent to which each of the differences between Income Tax and NICs - in particular the contributory principle, the levying of an employer charge and the differences in tax base - constitute serious barriers to integration. The paper concludes that few of the difficulties look individually prohibitive, but that trying too hard to avoid significant reform of the current policy framework could produce a merged tax so complicated as to nullify much or all of the benefits of integration.Taxation, social insurance, administration

Tax policy in the UK post-Brexit

Tax matters figured prominently in the Brexit debate. Current signs are, however, that the UK government is not planning the creation of a post-Brexit ‘Singapore on Thames’ as some had predicted. In fact, we are seeing increases to the main corporation tax rate in response to broader international tax developments and the fiscal upheaval caused by the pandemic. Prior to Brexit, the UK already enjoyed considerable freedom in respect of direct taxes including income tax and corporation tax, but less so for VAT; it has more freedom to change the VAT now, if desired, and has already introduced some relatively small amendments to reflect the new state of play. At this point, the government has exercised its new-found freedoms on tax in quite limited ways—most notably in creating freeports which will benefit from special advantageous customs and tax rules, refocusing R&D tax relief towards activity conducted in the UK, making relatively minor changes to tonnage tax, alcohol duties, and air passenger duty, and removing some narrow EU-focused corporation tax measures. However, these new-found tax freedoms come with new-found restrictions, costs, and challenges for both taxpayers and the UK government. There are significant changes on the tax administration front, which generally complicates matters for HMRC as it will have to rely on less extensive and less convenient treaty and OECD avenues of cooperation. On VAT, teething issues as well as longer-term complications have arisen post-Brexit for businesses and consumers. Provisions remain to control the extent of fiscal state aid, albeit in a less restrictive way under the new subsidy control mechanism in the UK/EU Trade and Co-operation Agreement. The strong overall message is that financial and international pressures and constraints are more important to the direction of tax policy than the fact that the UK has left the EU

Liquidity issues: solutions for the asset rich, cash poor

Liquidity concerns are oft raised when considering wealth taxes, yet the issue has received scant attention in the extant literature. In this paper we provide the first comprehensive review of the liquidity problem. Our aims are to estimate the scale of the problem, to explore the extent to which archetypal examples are at risk of experiencing low liquidity, and to review the policy options to reduce the scale and impact of liquidity challenges. Using data from Round 6 of the Wealth and Assets Survey, we demonstrate that the scale of the problem depends largely on conceptual and design issues. We find that farmers and business owners are commonly over-represented in the low-liquidity group, but there is little evidence to support the typical narrative surrounding single pensioners. Finally, we conclude our review with a number of preferred solutions to address liquidity issues, including recognising that a net wealth tax can be paid out of income or by sale of assets, by withholding tax (e.g. by pension providers), by borrowing/financing, deferred payment arrangements and, possibly in limited circumstances, payment in specie

The dynamics of taxation: essays in honour of Judith Freedman

Divulgação dos SUMÁRIOS das obras recentemente incorporadas ao acervo da Biblioteca Ministro Oscar Saraiva do STJ. Em respeito à Lei de Direitos Autorais, não disponibilizamos a obra na íntegra.Localização na estante: 336.2:34 D997

Income splitting, settlements and avoidance: taxing the family on business profits

In a progressive income tax system with an individual tax unit, high-rate taxpayers have an incentive to split income with lower-rate family members to minimise the family’s total tax burden. This raises equity and neutrality concerns. Adopting a spousal tax unit limits the gains from income splitting, but the individual is the better choice on privacy, autonomy, equality, definitional, marriage neutrality and work incentive grounds. Once the individual is chosen as the income tax unit, the control model provides a strong policy basis for attributing both earned and unearned income to individuals. Income splitting, however, undermines this model as well as the individual tax unit.This thesis focuses on the UK’s approach to income-splitting in family businesses. The relevant UK income tax rules, particularly the settlements provisions, are inadequate for the task. Various possible reforms are examined. Incorporating a transfer pricing or ‘reasonableness’ test into the settlements provisions would strengthen these rules, but would make taxpayer compliance with an uncertain regime even more difficult. Another option is to expand the scope of employment tax by moving the borderline between employees and the self-employed or companies. Deeper structural reforms could be made to enhance the neutrality of taxation on different legal forms of economic activity. This would reduce the incentives to incorporate for tax savings, including from income splitting. Integration of income tax and NICs is one such option; a dual income tax is another. A TAAR or GAAR also could be pursued. Ultimately, some combination of these various reform options could provide a partial solution to this challenging issue.</p

Income splitting, settlements and avoidance : taxing the family on business profits

In a progressive income tax system with an individual tax unit, high-rate taxpayers have an incentive to split income with lower-rate family members to minimise the family’s total tax burden. This raises equity and neutrality concerns. Adopting a spousal tax unit limits the gains from income splitting, but the individual is the better choice on privacy, autonomy, equality, definitional, marriage neutrality and work incentive grounds. Once the individual is chosen as the income tax unit, the control model provides a strong policy basis for attributing both earned and unearned income to individuals. Income splitting, however, undermines this model as well as the individual tax unit. This thesis focuses on the UK’s approach to income-splitting in family businesses. The relevant UK income tax rules, particularly the settlements provisions, are inadequate for the task. Various possible reforms are examined. Incorporating a transfer pricing or ‘reasonableness’ test into the settlements provisions would strengthen these rules, but would make taxpayer compliance with an uncertain regime even more difficult. Another option is to expand the scope of employment tax by moving the borderline between employees and the self-employed or companies. Deeper structural reforms could be made to enhance the neutrality of taxation on different legal forms of economic activity. This would reduce the incentives to incorporate for tax savings, including from income splitting. Integration of income tax and NICs is one such option; a dual income tax is another. A TAAR or GAAR also could be pursued. Ultimately, some combination of these various reform options could provide a partial solution to this challenging issue.EThOS - Electronic Theses Online ServiceGBUnited Kingdo