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Tax reforms are often motivated by their potential to improve economic performance. However, their actual impacts are difficult to quantify. We analyze the impact of flat tax reform on incomes using 'synthetic control' methods. We identify the eight Eastern and Central European countries that adopted flat tax systems between 1994 and 2005, and then compare post-reform GDP per capita of 'treated' countries with a convex combination of similar but 'untreated' countries, while accounting for the time-varying impact of unobservable heterogeneity. We find positive impacts in all eight countries, with seven out of eight cases significant at the conventional level. [ABSTRACT FROM AUTHOR]

In 2001 Russia's Tax Department replaced a three-band progressive tax schedule with a flat personal income tax rate of 13%. This article evaluates the employment response to the flat income tax using the data from the Russia Longitudinal Monitoring Survey. With these data, employment can be classified along two dimensions: primary vs. secondary and official vs. unofficial. This article finds that individuals respond to lower taxes by devoting less time to secondary employment. Official and unofficial employment, on the other hand, remain unaffected by the flattening of the tax schedule. These results are robust to various specifications. [ABSTRACT FROM PUBLISHER]

This article is a first attempt to provide a quantitative evaluation of the welfare gains resulting from the introduction of flat income taxation in Bulgaria in 2008. Using a calibrated microfounded endogenous growth model with physical and human capital accumulation and Bulgarian data, a computational experiment is performed to quantify the dynamic welfare effect of progressive income taxation vis-à-vis flat income taxation. The model demonstrates that significant welfare gains, measured in terms of per-period consumption, can be realized with the introduction of flat income taxation. In addition, these welfare gains increase proportionally with the length of the time horizon considered. Finally, sensitivity analysis was performed to demonstrate that the results obtained are robust. [ABSTRACT FROM PUBLISHER]

This paper provides a quantitative evaluation of the welfare effect of the introduction of proportional taxation in Bulgaria in 2008, an effect that operates through the grey economy channel. Using a general-equilibrium model, augmented with informal sector, a computational experiment is performed to evaluate the welfare gain from the adoption of proportional taxation. The lower effective tax burden in the new tax regime produces a relocation of people into the official sector, stimulates investment, and increases output and consumption. Finally, under the flat tax regime, the size of the informal sector is smaller, and quantitatively consistent with OECD (Is informal normal? Towards more and better jobs in developing countries. OECD, Paris, ) and European Commission (Tax reforms in EU member states, Official Publications of the European Communities, Luxembourg, p 2012, ) figures. [ABSTRACT FROM AUTHOR]

Copyright of Economica (1585-6216) is the property of College of Szolnok and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract: This paper simulates the distributional impact of the Russian personal income tax (PIT) following the flat tax reform of 2001 using data from the Russian Longitudinal Monitoring Survey. I decompose the change in the distribution of net income into a direct (tax) effect and an indirect effect. The indirect effect is further decomposed into evasion and productivity effects using existing estimates of these respective elasticities. As expected, the direct tax effect increased net income inequality. Changes in the pre-tax distribution (indirect effect), on the other hand, had a large negative impact on inequality thus leading to an overall decline in net income inequality. I also find that the tax-induced evasion response increased reported net income inequality while reducing consumption inequality. To the extent that consumption approximates actual income, these results demonstrate that the flat tax reform had a much smaller effect on actual income inequality than on reported income inequality. More importantly, relative to non-tax factor, the reform had little overall effect on income inequality. This suggests that objection to flatter tax schedules on the grounds of income inequality is mostly misguided, especially in transitional countries with high levels of evasion. [Copyright &y& Elsevier]

This article presents and evaluates the most important solutions concerning taxation on small enterprises in Poland. The author first discusses selected issues that are of importance for these enterprises in light of fiscal charges, particularly the option to choose the adequate form of taxation on income (general principles at progressive or linear scales, lump-sum tax on registered income, flat rate tax). Next, detailed regulations related to income tax and tax on goods and services are addressed. In conclusion, the author formulates some proposals for changes in taxation of small enterprises in Poland. [ABSTRACT FROM AUTHOR]

In our paper, we have used a database of tax returns from 2011 to assess how the tax reform, implemented in personal income taxation between 2010 and 2013, affected the tax burden of certain social groups and what implications the reforms had on the public finances. Our research follows the principles of positive economics using a static microsimulation model. Our findings reveal that the tax reform reduced government revenues by an annual total of HUF 444 billion. 74 per cent of this amount increased the net income of childless taxpayers in the top two income deciles. Although 63 per cent of the taxpayers with three or more dependent children are winners of the tax reform, in the bottom six income deciles tax liabilities of taxpayers with three or more children have not decreased markedly. Overall, we can conclude that it was income rather than the number of children which primarily affected the tax liabilities of private persons after the implementation of the tax reform. Reducing the tax rate to 9 per cent would result in a further 44 per cent decrease of budget revenues from personal income tax, which -- on the basis of the 2011 data -- would mean a loss of an additional HUF 522 billion of tax revenues on an annual basis. [ABSTRACT FROM AUTHOR]

The article discusses the corporate income tax reform and the corporate consumption tax. Topics discussed include value-added tax (VAT) and other related consumption taxes, the three basic consumption taxes such as the retail sales tax, the credit-invoice VAT, and the subtraction-method VAT along with the two variations on the subtraction-method VAT or "two-tier VATs" such as the Flat Tax and the X-Tax. It also discusses the growth and investment tax plan and the modern corporate tax.

Copyright of Türk Dünyası Araştırmaları is the property of Turk Dunyasi Arastirmalari Vakfi and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article studies a flat tax reform and capital tax reform in an economy with occupational choice and borrowing constraints. Building on previous models with heterogeneous agents and the flat tax reform within the representative firm framework, we introduce entrepreneurs as an occupation. We model endogenous entry and exit of firms whose size, number and production decisions are affected by the tax system. We compare steady state allocations in the benchmark economy with a progressive tax schedule to steady states with a flat tax at different exemption levels with or without a capital tax reform. We find that for low exemption levels the flat tax reform is efficient as well as welfare improving for both occupations. [ABSTRACT FROM AUTHOR]

The article discusses reforms on income tax and the flat tax in the U.S. It mentions proposals for change in other taxes including value-added tax (VAT), national sales tax and fair tax. It also notes that flat tax is considered one of the most reasoned proposals for modification due to its complexity, straining understandability to its effect on economic growth and inapplicability to American taxpayers.

Summary: The dual income tax combines a progressive tax on labor income and a lower flat tax on income from capital. Unlike flat tax systems, a dual income tax provides developing countries greater flexibility in addressing tax competition while retaining progressivity. Countries could use the move to a dual income tax system not just as an opportunity to rationalize the taxation of income from business operations and investment but also as a vehicle for broader reform of their tax systems. [Copyright &y& Elsevier]

Abstract: Recent success of the flat income tax in Eastern Europe raises questions about whether there is scope for such a policy reform in Western Europe as well. We address this by estimating the potential distributional impact of various flat taxes for selected Western European countries. Our simulations show that in specific circumstances a revenue neutral flat tax reform can increase income equality and improve work incentives; however, in most cases there is an equity-efficiency trade-off. We show that the specific flat tax design and the welfare state regime play a key role. [Copyright &y& Elsevier]

In 2007, Slovenia launched a comprehensive tax reform. This paper analyzes several proposed tax reform scenarios, including the flat tax proposal, with a dynamic general equilibrium model of the Slovenian economy, linked to a microsimulation model. We focus on the macroeconomic and welfare aspects of the proposed scenarios, capturing the effects on individual taxpayers and the government budget. The main characteristics of the model are presented along with the results of different reform scenarios, including that which finally passed the parliament and is now part of Slovenia's tax system. Our results suggest that choices other than the flat tax system are better suited to the country's longterm economic development. [ABSTRACT FROM AUTHOR]

We examine the effects of Russia's 2001 flat rate income tax reform on consumption, income, and tax evasion. We use the gap between household expenditures and reported earnings as a proxy for tax evasion with data from a household panel for 1998-2004. We associate large and significant changes in tax evasion following the flat tax reform with changes in voluntary compliance. We develop a consumption-based framework to assess the deadweight loss from income tax in the presence of tax evasion and show that the efficiency gains from the reform are at least 30 percent smaller than the gains implied by conventional approaches. [ABSTRACT FROM AUTHOR]

Microsimulation models (MSM) and Computable General Equilibrium models (CGE) have both been widely used in policy analysis. The combination of these two model types allows the utilization of the advantages of both types. The aim of this paper is to describe the state-of-the-art in simulation modeling and to demonstrate the benefits of linking both model types modeling using a flat tax reform proposal for Germany. [ABSTRACT FROM AUTHOR]

What factors explain the wave of adoption of the flat tax in Eastern Europe? It is argued in this article that, once the first few successes were underway, governments with liberal outlooks toward taxation adopted the reform through a process of rational learning: an often radically new government will tend to adopt the policy based on successful implementation of its neighbours. The issue of policy diffusion is approached by explicitly modeling the different mechanisms that might underlie the process. Little evidence is found for pure ‘bandwagoning’ in the adoption of the flat tax – the presence of other market-minded reforms do not predict adoption of the flat tax, and contagion measures do not capture the dynamics of the adoption of the reform. Instead, rational learning, where economically right-wing governments evaluated the success of the reform (as measured by their ability to attract foreign investment) in the medium term, plays the largest role. Rational emulation in a shorter time period contributes to the probability of adoption as well, as does a change to an economically liberal ideology. [ABSTRACT FROM AUTHOR]

In the past 20 years, the world has changed significantly, and so has the global economy. With these fundamental changes comes the demand for a new tax system that meets the needs of the modern company and individual. The three basic measures of a sound tax system are simplicity, efficiency, and equity; none of the current tax system and reform strategies meet all of these tests. The key to the initial popularity of a flat tax is its radical simplicity. It abolishes almost all tax deductions, credits, and exclusions in income taxes. This new system of taxation is gradually replacing outdated, progressive-rate tax systems which discourage the most productive people from working and saving more, and in turn reduce growth. The flat tax has already had remarkable results in Eastern European countries, such as Estonia, Lithuania, Latvia, Russia, and Ukraine. This reform has created a competitive fiscal environment, which encourages investment, risk taking, entrepreneurship and foreign capital inflows and provides increased work incentives. In the present article, after discussing the economic efficiency of progressive tax system, we review experiences of Eastern European countries which have chosen flat-rate taxation model. [ABSTRACT FROM AUTHOR]

The success of the flat rate income tax in eastern Europe suggests that this concept could also be a model for countries of western Europe. The present paper uses a simulation model to analyze the effects of revenue neutral flat rate tax reforms on equity and efficiency for the case of Germany. We find that a flat rate tax with a low tax rate and a low basic allowance yields positive static welfare effects amounting to approximately 1.8% of income tax revenue but increases income inequality. The increase in income inequality can be avoided by combining a higher tax rate with a higher basic allowance. But in this case, the efficiency gains vanish. We conclude that due to their limited efficiency effects and their problematic distributional impact, flat tax reforms are unlikely to spill over to the grown-up democracies of western Europe. [ABSTRACT FROM AUTHOR]

The article presents information on the impact of Mexico's new tax system on taxpayers in the country. After many years trying to raise tax collections in Mexico without significant success, Mexico's recently elected president, Felipe Calderon, was able to pass an innovative tax reform which includes the creation of a new tax regime intended to broaden the scope of the pre-existing income and asset tax system through the introduction of a "flat" tax as an alternative minimum tax, bringing in a set of new strict rules that are increasing tax revenues already. The unique features of Calderon's first comprehensive budget for 2008 include the new Flat Rate Business Tax and a new Tax on Cash Deposits (IDE), which will impose a tax of 2% on cash deposits made in Mexican bank accounts.

The article deals with the tax system in Mexico. The country's tax reform for the fiscal year 2007 included some amendments aimed at improving the collection of taxes, such as limitation to use net operating losses attributable to prior changes in ownership, stricter provisions on back-to-back loans, and no deduction of debts from the asset tax (AT) basis. According to the National Development Plan 2007-2012, tax reforms should be focused on establishing a sustainable development for the country. The Executive Branch submitted on June 20 2007, the 2008 Tax Bill to Congress, which contains among other reforms the new CETU flat tax. The flat tax rate would be 19% and it would be applied on a cash basis.

The article discusses the provisions of the Chinese Enterprise Income Tax Law. Under the law, income tax rates, deductions and preferential income tax policies and tax laws for local, foreign-invested and foreign enterprises will be unified. A 25 percent tax rate will be applied for all enterprises. The law also applies a withholding tax rate of 20 percent, offers preferential rates for certain types of enterprises and provides transitional rules for favorable tax rates for foreign-invested enterprises tax rates.

An examination of tax reform and the possibility of establishing flat tax rates around the world. The author begins by discussing the tax rates of some countries who are members of the European Union. He notes that in some of these countries the rates were so high they were considered detrimental to the economy. He notes that many countries chose to reform their systems in order to simplify them. He closes with a discussion of the advantages and obstacles that are related to a flat tax system.

This paper uses a new, large-scale, dynamic life-cycle simulation model to compare the welfare and macroeconomic effects of transitions to five fundamental alternatives to the U.S. federal income tax, including a proportional consumption tax and a flat tax. The model incorporates intragenerational heterogeneity and a detailed specification of alternative tax systems. Simulation results project significant long-run increases in output for some reforms. For other reforms, namely those that seek to insulate the poor and initial older generations from adverse welfare changes, long-run output gains are modest. [ABSTRACT FROM AUTHOR]

The article focuses on the state and direction of the tax reform in favor to the public in the U.S. It cites various considerations in a growing consensus of tax reform to ease the burden on saving and investment and provide significant simplification. It notes the fatal substantive and distributional and cosmetic problems involved in the flat tax, in the USA Tax, and in the sales tax and the impact of tax reform to the nation's economy. The author cites that tax reform is certainly worth doing if it focuses at increasing savings and invest and additional private savings must be established by baby boomers to maintain their living standards when they retire.

Recent estimates of the potential growth effects of tax reform vary wildly, ranging from zero to eight percentage points. Using an endogenous growth model, we assess which model features and parameter values are important for determining the quantitative impact of tax reform. We find that the critical parameters are factor shares, depreciation rates, the elasticity of intertemporal substitution, and the elasticity of labor supply. The elasticities of substitution in production, on the other hand, are relatively unimportant. The quantitative estimates in several recent papers are compared with each other and with some of the evidence from U.S. experience. We find that Robert Lucas's conclusion, that tax reform would have little or no effect on the U.S. growth rate, is theoretically robust and consistent with the evidence. [ABSTRACT FROM AUTHOR]