personal income tax

In 1987, Musgrave observed (1987, p. 59), “The Tax Reform Act of 1986 is the most sweeping reform since the early 1940s…” Indeed, the TRA [Tax Reform Act] did introduce a number of reforms, many of which are outlined in broad terms in Barth (1991), Barth and Brumbaugh (1992), Ott and Vegari (2003), and Sanger, Sirmans, and Turnbull (1990). For example, as observed in Ott and Vegari (2003, p. 279), “The Act introduced major cuts in the personal t ax rate. When fully effective (1988), only two tax brackets set at 15 and 28 percent, were to replace the 14 bracket tax schedule with rates in the range of 11 to 50 percent...[while it] broadened the tax base by reducing the itemized deduction.” Furthermore, as Barth (1991, pp. 45, 124) observes, among other things, under the TRA the 10 percent investment tax credit for the purchase of equipment was repealed, and the “life” of the investment was increased for depreciation purposes. Thus, it is hypothesized here that at the time the TRA was being enacted and being fully implemented (1986-1987), there were many complex and new provisions added to the U.S. Internal Revenue Code. Consequently, taxpayers in general, including would – be tax evaders, were unfamiliar with the sweeping changes in IRS policies. It logically follows that not only honest taxpayers but also those contemplating income tax evasion required time to climb the “learning curve” associated with the TRA, resulting in at least some temporary tempering of the aggregate degree of federal personal income tax

In 2013, federal personal income tax increases were implemented under provisions of two federal statutes: the American Taxpayer Relief Act of 2012 and the Patient Protection and Affordable Care Act of 2010. Based on our analysis of data available for the time period 1970- 2008, we argue that the incentives to engage in federal personal income tax evasion have been increased as a direct consequence of the public tax-increase policies manifested in these two statutes. To demonstrate this conclusion in the present study, we first present evidence that strongly suggests that personal income tax evasion has been an increasing function of the maximum marginal federal personal income tax rate over the period 1970-2008, which constitutes the most current data currently available on aggregate personal income tax evasion. This evidence leads us then to conclude that the federal personal income tax increases implemented effectively in 2013 under provisions of the two aforementioned statutes will result in increased tax evasion behavior and hence lower tax collections. Among other things, then, this public-policy-induced increase in personal income tax evasion also implies that the federal budget deficits in coming years will be greater than projected by the CBO and various government agencies. We also find that, among other things, federal personal income tax evasion has been an increasing function of the unemployment rate. Thus, among other things, there is also evidence that continued high unemployment rates may increase tax evasion and hence the size of federal budget deficits.

Since the beginning of the financial crisis, EU member states have taken different approaches to changing the personal income tax (hereinafter: PIT) system. In most cases, the PIT burden on low-income individuals is being reduced; some countries have the reduced tax bill for all taxpayers, while others have increased PIT for the highest income brackets or certain types of income sources. Slovenia is among those countries that have recently reduced the PIT burden on low-income individuals. This has been done by splitting the general tax allowance into three sizes depending on individual income and, as a result, the aggregated amount of PIT has declined 1 . However, irrespective of the recent financial and economic crisis, Slovenia has been already experiencing a series of PIT reforms.

In the present paper an attempt has been made to throw light on prevailing personal income tax structure in India. The paper briefly analyses the issues relating to high tax burden on people falling under low and medium income groups. Researcher concludes that there is still a need to bring more reforms in the personal income tax structure in the form of broadening the exemption limits, lowering the tax rates, reorganizing the different income tax slabs and simplify overall tax procedure so that people could be encouraged for compliance of tax laws.

The study examines the effect of tax avoidance and tax evasion on personal income tax administration in Nigeria. Tax evasion and tax avoidance, a problem which seems to have defied solution, had been deviled the tax system right from colonial times. While some had blamed the situation on tax authorities for not living up to expectation with regards to tax administration, others attribute it to the unpatriotic attitude of tax payers. It was in this light of contending position that the researcher carryout a survey in Nigeria with particular reference to Federal Inland Revenue Service Abuja. The sample size was derived statistically using Yaro Yamani formula. The sample size consists of three hundred and five (305) employees of Federal Inland Revenue Service Abuja. The study utilizes primary and secondary data. Tables and percentages were used for the analysis. The Analysis of Variance (ANOVA) was used to test the hypotheses. The research findings disclose that enlightenment and adequate utilization of tax revenue on public goods will discourage tax avoidance and tax evasion, high tax rates encourage tax avoidance and tax evasion, personal income tax generation has not being impressive and personal income tax rates are too high. The researcher therefore concluded that there is a direct and positive relationship between tax avoidance, tax evasion, tax rates and personal income tax administration in Nigeria. Hence recommended that tax officials should be constantly trained and retrained on the job, a deliberate and more aggressive public enlightenment campaign should be embarked upon by government and the reduction in tax rates for the poor.

The interest in income inequality is not waning. However, the focus of particular interest has been shifting, as researchers have in recent years devoted much atten- tion to the analysis of the very top of the income distribution, and also by exten- sion of the data series into the distant past. Our analysis does not include “the distant past”, but only the period from 1991 onwards. This was the year Slovenia gained independence and introduced its – admittedly short lived – currency, the Slovenian tolar. In 2007, Slovenia joined the eurozone, adopting the euro. The economic and financial crisis hit Slovenia hard, with a large drop in GDP; the growth rates (as published by the Statistical Office and available at www.stat.si) were -7.8% in 2009, 1.2% in 2010, 0.6% in 2011 and 2.6% in 2012. In this sense, the 1991-2012 period was quite eventful. We note that any attempt to extend the analysis further back in time, to cover the pre-1991 period (when Slovenia was a constituent republic of the Yugoslavian federation), would entail insurmountable methodological difficulties. Namely, the socialist system did not recognize the concept of gross income, and there was no personal income tax in the modern sense of the word 1 . Thus, prior to 1991, only summary data on net wages are avail-

In this study, we present evidence which strongly suggests that personal income tax evasion has been an increasing function of the maximum marginal federal personal income tax rate over the period 1970-2008, which constitutes the most current data currently available on aggregate personal income tax evasion. This evidence leads us to conclude that the federal personal income tax increases implemented effectively in 2013 under provisions of American Taxpayer Relief Act of 2012 and the Patient Protection and Affordable Care Act of 2010 will result in increased tax avoidance behavior. Among other things, this public-policy-induced increase in personal income tax evasion implies that the federal budget deficits in coming years will be greater than projected by the CBO and various government agencies. We also find that tax avoidance activity is an increasing function of the unemployment rate, the interest rate yield on three year Treasury Notes, and per capita real GDP (adopted as a measure of per capita real income), and a decreasing function of the Tax Reform Act of 1986 (during its first two years of being implemented), the IRS audit rate, and the ratio of the tax free interest rate yield on high grade municipals to the interest rate yield on ten year Treasury Notes. Thus, there is also evidence that persistently high unemployment rates may increase tax evasion and the size of federal budget deficits, although increasing the audit rate by IRS personnel may raise tax compliance to some extent.

The objective of this study is to appraise the evasion of personal income tax in Nigeria. A total of 160 questionnaires were administered to some selected self-employed individuals in Edo State comprising businessmen, contractors, professional practitioners like lawyers, doctors, accountants, architects and traders in shops as well as staff of Federal Inland Revenue Service in Benin City, Edo State, Nigeria. The result revealed that the tax payers’ relationship with tax authority (TAXPAY_TAXAUTH) and weak penalties (PENALTIES) have a significant influence on tax evasion in Nigeria. Tax rate showed a positive relationship with tax evasion. This means that the higher the tax rate the higher the tendency of tax evasion. The Board should intensify tax payer education and maintain a harmonious relationship capable of fostering voluntary compliance. In addition, efforts should be made towards entrenching stiff penalties for evaders. Finally the prevailing tax rates should be reviewed optimally as not to serve as disincentives to compliance. Keywords: Tax evasion, Penalties, Tax authorities, Tax rates, Compliance.

The objective of the paper is to examine whether the advantages and disadvantages mentioned in the literature of the flat rate income tax could be observed in Hungary. Personal income tax data provided by the Hungarian National Tax and Customs Administration was used to check the arguments. It was found that the flat tax indeed favours richer taxpayers, and because of the family tax credits, it heavily favours families with children. Tax revenues declined as tax rates were cut, while the GDP growth rate was close to stagnant. Both of these developments go against the expectations of the flat tax supporters, although it has to be mentioned that the changes were made in the midst of a European- and world-wide depression, which could have distorted the pure effects of the new tax code. Although in many countries the flat rate tax was a positive signal for investors boosting foreign direct investments, the Hungarian government introduced extra taxes on some of the transnational companies in order to balance the budget (and compensate for the lost personal income tax revenues), which meant that there was a decline in the mood of the investors. There is some indication that some illegal activities are shifted to the legal domain: the ratio of those tax reporters who earned an annual income of HUF 2 million or higher has gone from 62.5% to 66.6% in the period of 2010-12.

This paper will address the role and importance of fiscal policy in the Albanian economy during the transition period. Fiscal policies implemented during this period were different, depending on the programs of political parties that have governed. Generally, the analysis is focused on the PIT indicator (Personal Income Tax). Analyze the dynamics of income from PIT by these indicators; PIT revenues for ALL (leks) of GDP, income from PIT for ALL income tax, income from PIT for ALL income from taxes and customs etc. According years are reflected decisions and rate of change of the structure of PIT. It is analyzing the dynamics and the degree of relatedness between PIT and GDP (in percentage and in absolute figure). The aim is to analyze the degree of relatedness between PIT and GDP, so that in the future Fiscal Policy (PIT) affect more in the growth of GDP. Conclusions that have emerged from this analysis are: PIT is the tax that has changed more than any other tax, 9 times, almost every 2.8 years. There is strong correlative link between her and the dynamics of GDP in percentage and in absolute figure. This is because PIT is reflected in G (government purchases), and G is part of GDP. It is recommended not to change often the PIT rate, because frequent changes have a negative impact on the performance of revenue collection. In this paper, they used methods description, comparison, analysis, synthesis, statistics etc.

This study involves an assessment of the personal income tax system in Nigeria. To generate the data for the study, the ex-post factor research design was adopted. Hence, the data on personal income tax (PIT), total tax revenue (TTR), and Gross Domestic Product (GDP) for the study were collected from secondary sources such as the Central Bank of Nigeria (CBN) Statistical Bulletin and Annual Reports for 14 years. The time series data covered the periods 2000 – 2013. In this study, we adopted Oloidi and Oluwalana (2014) model of assessing tax productivity with little modification. In the model tax productivity is measured by applying somewhat cross elasticity between some economic indexes such as GDP and TTR. Our findings showed that personal income tax in Nigeria is unproductive. It generate serious economic burden on the tax payer to be able to yield maximum revenue for the government. However, we believe that the new legislation (the Federal Capital Territory Internal Revenue Act 2015), which establishes a new tax authority for the Federal Capital Territory (FCT) to administer and collect taxes from residents of the FCT will improve personal income tax particularly from high net-worth individuals. Based on the above, it is therefore recommended that the Nigerian Government should intensify effort to further improve revenue generation through personal income tax. The government should ensure that all self –employed individuals and traders register their businesses, and appropriate monitoring system should be put in place to ensure maximum compliance with personal income tax to promote its productivity.

This paper analyzed various redistributional aspects of Croatian personal income tax from 1997 to 2004. Progressivity was decomposed using the methodology proposed by Pfähler (1990) and further elaborated by Lambert (2001). The breakdowns reveal how dif- ferent elements of the PIT system, that is, the rate structure, allowances, deductions and tax credits, contribute to the achievement of overall progressivity. It is shown that the patterns of progressivity, and the effects of the elements which cause it, vary over the quantiles of the pre-tax income distribution. Quantile analysis thus has an advantage over scalar meas- ures, such as the standard Gini-based measures of income inequality (Gini coefficient), and of progressivity (Reynolds-Smolensky and Kakwani indices). However, in this paper scalar measures are also used, so-called S-indices, which have been purpose-designed in terms of single parameter Gini and concentration indices, where the parameter expresses the SDM’s ethical judgments. For different choices of the ethical parameter underpinning the S-indices, comparison of results obtained for different time periods (countries) will bring different results. Also, the conclusions about the relative contributions of PIT ele- ments to progressivity are sensitive to the coverage of population that is analyzed.

Ihendinihu, Jones and Ibanichuka (2014) examined the dynamic causal relationship between tax revenue components and economic growth in Nigeria. The enquiry was motivated by the need to provide justification for policy adjustments needed for broadening the narrow revenue base of the government and enhancing economic growth. Time series data on different types of taxes and real GDP from 1986 to 2012 were extracted from government official sources and Bounds testing technique was used in analysing the data. The results implicated total tax revenue as having significant effect on economic growth, explaining about 73.4% of the variations in real GDP. While Company Income Tax (CIT), Education Tax (EDT) and Other Tax Revenue (OTR) were found to have significant influence on economic growth, no significant casual links were shown to exist between Petroleum Profit Tax (PPT), Value Added Tax (VAT) and economic growth. The study suggests appropriate legislative adjustments in fiscal administration and responsibility to strengthen growth in tax revenue components in Nigeria. However, the paper did not give prominence to personal income tax as it subsumed it under OTR. The direct effect of PIT on economic growth was not isolated and reported. The paper also did not investigate the effects of changes in PITA on the taxpayers‟ circumstances.

The subject of this paper is just to measure the eff ectiveness of collection of personal income tax as one of the primary principles of good tax systems. Tax collection means, for the individual participants in the whole process of collection and administration of taxes, real harm representing to taxpayers payment of taxes and other costs caused by the tax system, which must spend during fulfi llment of their tax liabilities. By collection of tax, the actual state (tax authority), does not gain net income, which would correspond to a total collection of taxes, but tax revenues are reduced by the amount of costs necessary to the functioning of the entire system of tax collection and administration. This creates a clear disproportion between the amount of collected tax and the amount, which can be used by public budget for public interest. The aim is, of course, to seek to minimize the diff erence between these two angles of look at the collected amount of tax. The purpose of good fi scal policy of the state, as part of national economic policy, is the eff ort for effi ciency of collection of individual components making up the tax system of the state.

Musgrave [1987, p. 59] also expressed concern that the “…compounding of the investment tax credit and accelerated depreciation diluted and distorted the base of the corporate income tax.” Musgrave [1987, p. 59] asserted that the TRA “…reversed these trends, a major accomplishment that all reformers will welcom e.” As Barth [ 1991, pp. 45, 124] observes, among other things, under the TRA the 10 percent investment tax credit for the purchase of equipment was repealed, and the life of the investment was increased for depreciation purposes. Based on Musgrave’s [1987] arguments, as well as findings for an earlier study period in Cebula – Coombs -- Yang [2009], then, it is expected in the present study that taxpayers might well have favorably regarded the TRA and been less resentful of the Internal Revenue Code than before, at least initially. Thus, it is hypothesized here that at the time the TRA was being enacted and becoming effective, 1986-1987, and also received the greatest publicity, reduced taxpayer resentment of the federal income tax system/Internal Revenue Code would/could, at least temporarily, have resulted in a reduced degree of aggregate personal income tax evasion, ceteris paribus. The reason this reaction to the TRA might be only temporary is also revealed in the study by Cebula – Coombs -- Yang [2009], who argue that it would likely take at least some time for taxpayers to adequately understand and make adjustments to the newly revised Internal Revenue Code. Consequently, it is hypothesized here that, for the period when the TRA was initially implemented, 1986, through the year the TRA became “ de facto fully effective,” 1987 [Barth, 1991; Barth -- Brumbaugh, 1992], the eb was reduced. Accordingly, [2] above is replaced by [3]:

Under the reality condition of economic development, people’s income growth, it is difficult to draw an income standard to determine whether individuals belong to high income groups. But by refer to the social average wage level indicators, combining with the daily administration work experience as well as knowing the high income group’s tax [1], we can preliminarily determine the following individual personal income tax as the key moni- toring scope of high-income groups: 1) The foreigners, overseas Chinese and Hong Kong, Macao and Taiwan compatriots that worked in our city; 2) Foreigners, overseas Chinese and Hong Kong, Macao and Taiwan com- patriots that offer services in our city in the name of the foreign companies; 3) Foreigners, overseas Chinese and Hong Kong, Macao and Taiwan compatriots that provide professional services as independent personal identity; 4) Coaches and athletes, actors, fashion models, TV hosts; 5) Employees’ lawyers, Certified Public Accountants (Certified tax agents), stock traders, agents that engaged in literature and art, sports, and economic activity; 6) Above district-level medical institutions or experts that above social associate chief physician and associate professor of medical institutions, and experts that above the professors of Higher Institutions; 7) The expatriate staff; 8) The legal representative and financial director of high income industry in our city; 9) Individuals that get two or more personal wages and salaries; 10) Building contractors; 11) Private limited liability company’s investors (shareholders) with last year’s business (sales) income reached 10 million Yuan and over; 12) Indi- vidual business owners, sole proprietorship, the partnership enterprise investors, investment lawyers that with last year’s business (sales) income reached 5 million Yuan and above; 13) The other key taxpayers that are de- termined by the tax authorities.

16. B ias occurs (very positive effects) for income classes with a relatively high frequency of individuals with only part of the year income (low income earners). In practice, the personal exemption is partly deducted from pre-tax income by withholding the wage tax, i.e. concurrent to period of working. When personal exemptions are not fully used (tax liability is higher than duty), individual taxpayers generally will ask restitution. In that case the restitution will take place in the next fiscal year. However, in our analysis of the flat tax, we simulate the full personal exemptions (whole year).

PAYE Standard Taxable Personal Total PAYE Personal tax tax rate income income claimable taxpayers allowances.. receipts t TI Y personal in total PAL allowances population.[r]

Thus, on average for the period I947 to I97~, a policy of indexation of tax allowances to the rate of inflation would still have yielded tax increases even with no real income growth.8° [r]

Thus another approach to assessing the level of income tax non-compliance that is used is an analyses of failure in submitting annual retums in the years of 1995-1997 in Malaysia, amon[r]