Taxation/Addendum: Difference between revisions
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==The development of modern tax systems== | ==The development of modern tax systems== | ||
Modern tax systems had their origins in the 18th century in the United States<ref>[http://www.treasury.gov/education/fact-sheets/taxes/ustax.shtml ''History of the US Tax System'', US Department of the Treasury Fact Sheet, 2009]</ref> and in Britain<ref>[http://www.hmrc.gov.uk/history/ ''A Brief History of Income Tax'' H M Revenue and Customs, 2009]</ref>, and have since evolved piecemeal until they have become so complex that they are fully understood only by highly-trained specialists. | Modern tax systems had their origins in the 18th century in the United States<ref>[http://www.treasury.gov/education/fact-sheets/taxes/ustax.shtml ''History of the US Tax System'', US Department of the Treasury Fact Sheet, 2009]</ref> and in Britain<ref>[http://www.hmrc.gov.uk/history/ ''A Brief History of Income Tax'' H M Revenue and Customs, 2009]</ref>, and have since evolved piecemeal until they have become so complex that they are fully understood only by highly-trained specialists. | ||
Tax revenues in the developed countries now amount, typically, to 30 to 40 per cent of GDP, compared with 10 to 15 per cent at the beginning of the 20th century. The following paragraphs indicate some of the variations that have typically been adopted. | Tax revenues in the developed countries now amount, typically, to 30 to 40 per cent of GDP, compared with 10 to 15 per cent at the beginning of the 20th century. The following paragraphs indicate some of the variations that have typically been adopted. A comprehensive classification of taxes is available from the OECD<ref>[http://www.oecdwash.org/PUBS/ELECTRONIC/SAMPLES/revenue_methodology2004.pdf ''The OECD Classification of Taxes and Interpretative Guide'', OECD, 2009]</ref> | ||
==Components of taxation== | ==Components of taxation== | ||
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===Corporate income tax=== | ===Corporate income tax=== | ||
Corporate income tax accounts for about 11 per cent of the average tax receipts of the OECD countries and tax rates are mainly between 15 per cent and 35 percent <ref name=OECD/>. As for personal taxation, many different ways of defining taxable income have been adopted<ref>[http://www.ifs.org.uk/docs/meade.pdf, see ''The Structure and Reform of Direct Taxation'', (the Meade Report), chapter 12, page 227]</ref>, often with allowances for depreciation or research and development and with "tax breaks" for selected commercial activities. In principle there are also the options of "source-based", "residence-based" or "destination-based" systems (ie related to the location of the parent company, residence of the investor or the location of the final sale). | Corporate income tax accounts for about 11 per cent of the average tax receipts of the OECD countries and tax rates are mainly between 15 per cent and 35 percent <ref name=OECD/>. As for personal taxation, many different ways of defining taxable income have been adopted<ref>[http://www.ifs.org.uk/docs/meade.pdf, see ''The Structure and Reform of Direct Taxation'', (the Meade Report), chapter 12, page 227]</ref>, often with allowances for depreciation or research and development and with "tax breaks" for selected commercial activities. In principle there are also the options of "source-based", "residence-based" or "destination-based" systems (ie related to the location of the parent company, residence of the investor or the location of the final sale). | ||
===Taxes on consumption=== | |||
Taxes on consumption account for about 25 per cent of the average tax receipts of the OECD countries | |||
===Social security contributions=== | ===Social security contributions=== | ||
Social security contributions account for about 24 per cent of the average tax receipts of the OECD countries | Social security contributions account for about 24 per cent of the average tax receipts of the OECD countries | ||
===Taxes on wealth and property=== | ===Taxes on wealth and property=== | ||
Revision as of 09:36, 12 November 2009
The development of modern tax systems
Modern tax systems had their origins in the 18th century in the United States[1] and in Britain[2], and have since evolved piecemeal until they have become so complex that they are fully understood only by highly-trained specialists. Tax revenues in the developed countries now amount, typically, to 30 to 40 per cent of GDP, compared with 10 to 15 per cent at the beginning of the 20th century. The following paragraphs indicate some of the variations that have typically been adopted. A comprehensive classification of taxes is available from the OECD[3]
Components of taxation
Personal income tax
Personal income tax accounts for about 25 per cent of the average tax receipts of the OECD countries. Taxable income is defined in a variety of ways, with many different allowances, exemptions and deductions. Tax rates are generally progressive, usually starting after a tax-free range for the lowest incomes, and followed by a sequence of higher rates as successive "thresholds" are exceeded, to reach maximum (and marginal) rates that are mostly between 40 per cent and 60 per cent [4]. Income from investments and income from employment are sometimes treated differently and there is sometimes special treatment for the elderly.
Corporate income tax
Corporate income tax accounts for about 11 per cent of the average tax receipts of the OECD countries and tax rates are mainly between 15 per cent and 35 percent [4]. As for personal taxation, many different ways of defining taxable income have been adopted[5], often with allowances for depreciation or research and development and with "tax breaks" for selected commercial activities. In principle there are also the options of "source-based", "residence-based" or "destination-based" systems (ie related to the location of the parent company, residence of the investor or the location of the final sale).
Taxes on consumption
Taxes on consumption account for about 25 per cent of the average tax receipts of the OECD countries
Social security contributions
Social security contributions account for about 24 per cent of the average tax receipts of the OECD countries
Taxes on wealth and property
Environmental taxation
References
- ↑ History of the US Tax System, US Department of the Treasury Fact Sheet, 2009
- ↑ A Brief History of Income Tax H M Revenue and Customs, 2009
- ↑ The OECD Classification of Taxes and Interpretative Guide, OECD, 2009
- ↑ 4.0 4.1 OECD Tax Database, 2009
- ↑ see The Structure and Reform of Direct Taxation, (the Meade Report), chapter 12, page 227