Search results

The results of this study indicate that a likely reason why a negative relation between estimated implicit taxes and pretax returns is empirically observed is the researcher’s election to choose a zero tax rate as the benchmark state and local tax rate. Normally, an observed negative relation between estimated implicit taxes and pretax returns supports the hypothesis generated by implicit tax theory. This conclusion regarding the implicit tax hypothesis may be premature whenever the incidence of state and local income taxes contributes to this empirical finding. First, state income taxes, treated as a negative subsidy when the benchmark state and local tax rate is set at zero, will likely cause implicit taxes to be underestimated. Second, the observed relationship between estimated implicit taxes and pretax returns appears to be reversible depending upon the researcher’s election of a statutory tax rate that incorporates the selected benchmark state and local tax rate.

The present study uses a sample of 848 firms covering the years from 1989 through 1998 to show how the relation between estimated implicit taxes and pretax returns can be manipulated by the selection of the benchmark state and local tax rate. Since choosing an accurate benchmark state and local tax rate can be problematic, the present study suggests adjusting both estimated implicit taxes and pretax income by the amount of state and local income taxes incurred. The results, using the regression model making this adjustment, appear to nullify the negative bias of a zero tax rate as the benchmark state and local tax rate.

This paper uses a simple analytic model to analyze the problem of tax evasion by a monopolist subject to price ceiling regulation. Prior research had explored tax evasion decisions of a monopolist in a non-regulatory environment. However, since monopolies often operate in a regulatory environment, it is important to examine how a regulated monopolist makes its tax reporting decisions. This paper shows that under certain conditions, an increase in the effective price ceiling increases tax evasion. The production decision of the monopolist however is unaffected by tax evasion parameters. A social planner, attempting to maximize social welfare, subject to a revenue constraint, can achieve optimality in a number of ways; with or without full compliance.

Scholars suggest that failure to include implicit taxes in analyses of vertical equity understates the progressivity of the tax system. This paper develops an analytic expression for imputing the implicit tax associated with tax-exempt bonds using the tax-exempt interest income reported on individual income tax returns. To measure progressivity, Kakwani indices are calculated using three definitions of income and three measures of tax liability. In addition, the indices are computed by adding implicit income to the income measure. Examination of the Kakwani indices leads to the conclusion that the tax system is progressive for all measures of tax liability. Total tax (explicit plus implicit), measured against explicit plus implicit income, is more progressive than explicit tax measured against explicit income. Including the implicit tax associated with tax-exempt interest in the measurement of tax progressivity increases the level of progressivity of the tax system slightly.

The chapter explores the possibilities related to using ChapGPT in tax education. Specifically, we address how tax has historically been taught in higher education and how the use of new and developing artificial intelligence (AI) tools such as ChatGPT can enhance this process going forward. The key takeaway is that AI tools are just that – tools. While tools can be effective in the problem-solving process, they are not a substitute for natural intelligence. Some basic level of subject matter knowledge is necessary to formulate the appropriate question or prompt at the beginning of the process. Additionally, a certain level of subject matter knowledge is needed to ensure that the response ultimately generated by the technology is logical, makes sense, and most importantly, provides the information necessary to appropriately address the problem at hand.

The purpose of this chapter is to show the topicality of reformation of the state tax system as an inseparable part of Russia’s digital economy.

The main problems of state tax systems impossible to solve without information technology (IT) products and wide practical implementation of information technologies are shown. The authors also show problems of formation of legal and information environment in the tax sphere.

The results of the research show the role of information technologies in Russian tax administration system. In particular, analysis of the main elements of tax administration, implementation of which is impossible without information production, is performed, and the influence of information technologies on the observation of tax administration principles in Russia is determined.

Based on the experience of foreign countries in the sphere of information production of tax system, the Russian practice of implementation of the modern information technologies and solutions in the tax sphere is given and the initial results are analyzed.

The paper proposes an alternative way of defining tax progressivity, one in which it becomes a function of marginal, not average tax rates. Changes in Tax Progressivity are then related to modifications in the distribution of pre-tax incomes or to variations in marginal rates. Using Israel’s Wage and Insurance Data File for the year 1993, the empirical analysis checks the impact of the 1995 Law for the Reduction of Poverty and Income Disparities on the progressivity of the National Insurance Tax System. Simulations are also conducted to study the effect of alternative policies.