Tax shift
Tax shift or tax swap is a change in
Introduced
Definition:
Tax shift is a kind of economic phenomenon in which the taxpayer transfers the
- Tax shift is the redistribution of tax burden. Its economic essence is the redistribution of national income of everyone. The absence of redistribution of national income does not constitute an active of tax shift.
- Tax shift is an objective process of economic movement. It does not include any emotional factors. Whether taxpayers take the initiative to raise or lower prices or passively accept price fluctuations is not related to tax shift. Whether the economic relationship between the taxpayer and the tax bearer is a class opposition or the unity opposition, it is also unrelated to the tax shift.
- Tax shift is achieved through price changes. The price mentioned here includes not only the price of the output but also the price of the element. The price changes mentioned here include not only direct price increase and price reduction, but also indirect price increase and price reduction. No price change, no tax shift.
It has the following three characteristics:
- It is closely linked with price increase and decrease;
- It is the redistribution of tax burdens among economic entities, and it is also a redistribution of economic interests. The result will inevitably lead to inconsistency between taxpayers and tax bearer;
- It is the taxpayer's proactive behavior.
Condition
In general, the existence of tax shift mainly depends on the following two conditions:
The existence of commodity economy
Tax shift is achieved through commodity price changes in
The existence of a free pricing system
Tax shift is directly linked to the price movement, which is usually achieved by increasing the selling rate of sales goods and lowering the purchase price of the purchased good. Among them, the tax burden of some taxes can be directly passed on by changes in prices; the tax burden on some taxes is through changes in capital investment, which affects the supply and demand of commodities indirectly through the changes in prices. Regardless of which form of transfer is adopted, it depends on price changes. Therefore, the free pricing system is the basic condition for tax shift.
The free pricing system refers to a price system in which producers or other market entities can price themselves according to changes in market supply and demand. There are mainly three types of price systems: the government-instructed program price system, the floating price system, and the free price system.
Under the government's mandatory plan price system, the producers, operators and other market entities do not have their own pricing power, prices are directly controlled by the government, and taxpayers cannot pass tax burden through price changes.
Under the floating price system, the government determines the maximum price or minimum price of a commodity. Within the range of fluctuations, the producers, operators and other market entities have a certain amount of freedom in pricing, and tax shift can be realized within a certain extent and within a certain range.
Under the free pricing system, the producers, operators and other market players can freely set prices according to changes in the market supply and demand relationship, and the tax burden can be passed on.
Through the analysis of the conditions for the shift of tax burdens, we can conclude that basically there is still an objective shift of tax burden even if under the highly centralized program management system. After implementing the market economy system, there is an objective shift in tax burden. But the market economy is a highly developed commodity economy. Under this system, the production and business operators of goods and other market entities have their own independent material interests. Profitability has become the fundamental motive for all production and business activities, and the realization of
Changes in costs
The transfer of tax burdens is related to changes in costs. In the three situations of fixed, increasing and declining costs, tax transfer has different characteristics.
For goods with
For goods with increasing cost, tax burdens can only be partially passed on. Because the unit cost of this commodity increases with the increase in output, the increase in the price of goods after taxation will affect the market. The seller has to reduce production to reduce the cost of products in order to maintain marketability, and thus the tax amount cannot be all passed on.
For goods with diminishing costs, the tax burden can be all passed on to the buyer. Because the unit cost of such goods decreases with the increase in output, if there is no
Proposed
The following table lists tax shifts that have been proposed or introduced:
Name, location, proponent, source | From | To | Claimed benefits |
---|---|---|---|
Green tax shift (see ecotax )
|
various | ecotax
|
environment |
Tax Shift for the Pacific Northwest (Durning & Bauman 1998) | carbon tax, pollution tax, traffic tax, sprawl tax (Land value tax), resource consumption tax | environment; public health; reduction of gridlock; countering speculation; equity; administrative ease | |
Property tax shift (PTS)[4] | sales, income, and buildings | Land value tax | housing supply; sprawl; equity |
Philadelphians for Land Value Tax Shift[5] | tax rates on structures | land-value tax | economic development, countering speculation |
Illinois[6] | property tax | individual and corporate income tax | extra unearned income for landowners |
Mississippi[7][8]
Tennessee[9] |
Grocery or food tax | cigarette tax | public health; support for basic needs |
Wyoming Tax Swap[10] | sales tax, use tax, and business personal property tax | flat income tax | |
FairTax | personal income tax, estate tax
|
national retail sales tax with rebate | provide tax burden visibility; reduce compliance costs; global competitiveness |
Other uses
Tax swap can also refer to the sale of a security that has declined in price since its purchase and the simultaneous purchase of a similar but not identical security, in order to realize a loss for tax purposes while maintaining a position.[11]
See also
- Ecological economics
- Energy economics
- Environmental economics
- Feebate
- Green economy
- Natural resource economics
- Polluter pays principle
- Single tax
- Tax reform
References
- ^ "Will Canadians support this kind of change?". Sustainable Prosperity FAQs. Sustainable Prosperity.
- ^ Leachman, Michael (2006-04-14). "The Great Corporate Tax Shift: Undercutting Oregon's Economy and Quality of Life".
- ISBN 7302093547.
- ^ Smith, Jeffery J.; Kris Nelson (December 1999). "Giving Life to the Property Tax Shift (PTS)". Redefining Progress.
- ^ "Philadelphians for Land Value Tax Shift". Earth Rights Institute.
- ^ Clements, Kate (2006-08-29). "Frerichs backs tax swap plan". The News-Gazette.
- ^ "Title unknown". 2006-03-29.
- ^ "Title unknown". 2006-10-18.
- ^ "We did it! First-ever cut in state food tax passes!!!". Tennesseans for Fair Taxation. 2007-06-12.
- ^ Glass, Brett. "The "Wyoming Tax Swap"".
- ^ "tax swap Definition". InvestorWords. WebFinance, Inc.
External links
- ISBN 1-886093-07-5.
- A Distributional Analysis of an Environmental Tax Shift
- Tax Cuts vs. Tax Shifts
- Making an Energy Tax Work for Business (in the UK)
- Sharing the Wealth (a web site opposing what they perceive as a tax shift)