Economics Dictionary of ArgumentsHome
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| Tax avoidance: Tax avoidance refers to legal methods individuals or businesses use to minimize their tax liability by exploiting loopholes or taking advantage of tax laws. Unlike tax evasion, which is illegal, tax avoidance involves strategic planning within the confines of the law to reduce taxes owed. See also Taxation, Tax evasion, Tax havens, Tax competition, Tax incidence, Tax loopholes, Tax system._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Emmanuel Saez on Tax Avoidance - Dictionary of Arguments
Saez I 132 Tax Avoidance/Saez/Zucman: (...) tax avoidance, in contrast to more fundamental responses to taxes, can be drastically reduced by policymakers. When all income - whether it derives from capital or labor, whether consumed or saved, whether booked in Bermuda or in the United States, whether paid to a bank account in Zurich or in Paris - is taxed at the same rate, and when the supply of tax dodges is strictly constrained, tax avoidance can almost disappear. Saez I 133 (...) the 1986 Tax Reform Act—which reduced the top marginal income tax rate to 28% - led to a rise in the amount of income reported by the rich. But this increase was mostly due to changes in tax-avoidance strategies (as it became profitable to avoid the 35% corporate tax rate by organizing businesses as partnerships, subject to the individual income tax) and not an increase in labor supply.(1) /When tax avoidance is kept in check, the lesson from modern research is that the >elasticity of taxable income is generally quite low - and therefore the optimal tax rate quite high.) >Tax Avoidance, >Tax Competition, >Tax Compliance, >Tax Evasion, >Tax Havens, >Tax Incidence, >Tax Loopholes, >Tax System, >Taxation. 1. See Slemrod (1990) and Saez (2004) for a discussion of tax avoidance responses around the Tax Reform Act of 1986. Moffitt and Wilhelm (2000) show that the increase in the taxable income of high-income individuals around the tax reform was not accompanied by an increase in hours of work: -Slemrod, Joel. Do Taxes Matter? The Impact of the Tax Reform Act of 1986. Cambridge, MA: MIT Press 1990. -Saez, Emmanuel. “Reported Incomes and Marginal Income Tax Rates, 1960–2000: Evidence and Policy Implications.” In James Poterba, ed., Tax Policy and the Economy, Volume 18. Cambridge, MA: MIT Press, 2004. -Moffitt, Robert, and Mark Wilhelm. “Taxation and the Labor Supply Decisions of the Affluent.” In Joel Slemrod, ed., Does Atlas Shrug? The Economic Consequences of Taxing the Rich. New York: Russell Sage Foundation, 2000. 193–234._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Saez, Emmanuel | ||
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