Lecture6a.ppt

Lecture6a.ppt - Lecture6:Other considerationsintaxpolicy...

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    Lecture 6:  Other  considerations in tax policy
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    Outline of lecture Costs of tax compliance Incentives to comply with the tax law Costs of tax enforcement Key types of tax evasion Examples of tax avoidance Counter-cyclical tax policy
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    Additional efficiency cost due to time  spent dealing with tax law Survey evidence that individuals spend on average 27 hours/year filling out forms, while self-employed spend 60 hours/year Large firms have whole departments dealing with taxes, and hire services from consulting firms focusing on tax issues Fear of tax audits probably has more to do with required time than any resulting tax savings
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    How can this time be reduced? No need for individual tax returns if government relies solely on information reported by firms to the government. In the U.K., most people just receive a postcard telling them how much is still owed, based on such reported information. In U.S., firms already report information on wage payments, interest payments, dividends, mortgage interest, and state income taxes. Lack of information on capital gains, income to firms, and family structure.
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    Can eliminate individual tax filings  if:  Tax individuals rather than families, or have automatic reporting of family structure Exempt capital gains, or require firms to report purchase price as well as sales price of shares Eliminate other line items from tax form where information not directly available. Maintain current audits of tax filings by firms, both corporate and non-corporate As in U.K., government can simply bill us for the difference between calculated amount and amount withheld.
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  Political arguments for tax returns Time spent filling out forms highlights how much we pay in taxes. Compare with payroll tax or sales tax. Allows for fine tuning based on information
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This note was uploaded on 11/03/2009 for the course ACCT 130 taught by Professor Huxhold during the Spring '09 term at UCSD.

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Lecture6a.ppt - Lecture6:Other considerationsintaxpolicy...

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