1.
Revenue stamp
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Typically businesses purchase the stamps from the government, and attach them to taxed items as part of putting the items on sale, or in the case of documents, as part of filling out the form. Revenue stamps often look similar to postage stamps, and in some countries. Revenue stamps are used to collect taxes and fees. They are issued by governments, national and local, and by bodies of various kinds. They take many forms and may be gummed and ungummed, perforated or imperforate, printed or embossed, in many countries, they are as detailed in their design as much as banknotes, they are often made from the same type of paper. The high value of revenue stamps means that they may contain security devices to prevent counterfeiting. The Revenue Society has defined revenue stamps as, in the Ottoman empire, Damga resmi was already in use by the sixteenth century. Records of tax revenue from stamps for silk provide evidence of changes in production over time. The use of revenue stamps goes back further than that of postage stamps, Revenue stamps have become less commonly seen in the 21st century, with the rise of computerization and the ability to use numbers to track payments accurately. There are a great many kinds of revenue stamps in the world, both national and local entities have issued them. Governments have sometimes combined the functions of postage and revenue stamps, in the former British Empire, such stamps were often inscribed Postage and Revenue to reflect their dual function. Other countries have simply allowed revenue stamps to be used for postage or vice versa, a revenue stamp authorized subsequently for postal use is known as a postal fiscal. Bhutan, for instance, authorized the use of stamps for postal purposes from 1955 until the first proper postage stamps of the country were issued in 1962. In the Stanley Gibbons catalog, this type of stamp has an F prefix, while revenue stamps often resemble postage stamps, they are not normally intended for use on mail and therefore do not receive a postal cancellation. Some countries such as Great Britain have issued stamps valid for postage and revenue, but this practice is now rare. Many different methods have used to cancel revenue stamps, including pen cancels, inked handstamps, perforating, embossing. From around 1900, United States revenue stamps were required to be mutilated by cutting, after being affixed to documents, a class of office equipment was created to achieve this which became known as stamp mutilators. Revenue stamps were widely collected by philatelists and given the same status as postage stamps in stamp catalogues
2.
Tax evasion
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Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion is an activity associated with the informal economy. In contrast, tax avoidance is the use of tax laws to reduce ones tax burden. In 1968, Nobel laureate economist Gary Becker first theorized the economics of crime, allingham and A. Sandmo produced, in 1972, an economic model of tax evasion. This model deals with the evasion of tax, the main source of tax revenue in developed countries. According to the authors, the level of evasion of income tax depends on the detection probability, the literatures theoretical models are elegant in their effort to identify the variables likely to affect non-compliance. Alternative specifications, however, yield conflicting results concerning both the signs and magnitudes of variables believed to affect tax evasion, empirical work is required to resolve the theoretical ambiguities. Income tax evasion appears to be influenced by the tax rate, the unemployment rate. The U. S. Tax Reform Act of 1986 appears to have reduced tax evasion in the United States, customs duties are an important source of revenue in developing countries. Importers purport to evade customs duty by under-invoicing and misdeclaration of quantity, when there is ad valorem import duty, the tax base can be reduced through underinvoicing. Misdeclaration of quantity is more relevant for products with specific duty, production description is changed to match a H. S. Code commensurate with a lower rate of duty. Smuggling is importation or exportation of products by illegal means. Smuggling is resorted to for total evasion of customs duties, as well as for the importation of contraband, during the second half of the 20th century, value-added tax emerged as a modern form of consumption tax throughout the world, with the notable exception of the United States. Producers who collect VAT from consumers may evade tax by under-reporting the amount of sales, the US has no broad-based consumption tax at the federal level, and no state currently collects VAT, the overwhelming majority of states instead collect sales taxes. Canada uses both a VAT at the level and sales taxes at the provincial level, some provinces have a single tax combining both forms. In addition, most jurisdictions which levy a VAT or sales tax also legally require their residents to report and this is especially prevalent in federal countries like Nigeria, US and Canada where sub-national jurisdictions charge varying rates of VAT or sales tax. In Nigeria, for example, some federated states enforce VAT on each item of goods sold by traders, the price must be clearly stated and the VAT shown separately from the basic price. If the trader does not comply this is punishable as an attempt to siphon the VAT, therefore, it is not generally cost-effective to enforce tax collection on low-value goods carried in private vehicles from one jurisdiction to another with a different tax rate
3.
Tax resistance
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Tax resistance is the refusal to pay tax because of opposition to the government that is imposing the tax, or to government policy, or as opposition to taxation in itself. Tax resistance is a form of action and, if in violation of the tax regulations. Examples of tax resistance campaigns include those advocating home rule, such as the Salt March led by Mahatma Gandhi, and those promoting womens suffrage, such as the Womens Tax Resistance League. War tax resistance is the refusal to pay some or all taxes that pay for war, Tax resisters are distinct from tax protesters, who deny that the legal obligation to pay taxes exists or applies to them. Tax resisters may accept that some law commands them to pay taxes, the earliest and most widespread forms of taxation were the corvée and tithe, both of which can be traced back to the beginning of civilization. The corvée was state-imposed forced labour on peasants too poor to pay other forms of taxation, because taxation is oppressive, governments have always struggled with tax noncompliance and resistance. Indeed, it has suggested that tax resistance played a significant role in the collapse of several empires, including the Egyptian, Roman, Spanish. Reports of collective tax refusal include Zealots resisting the Roman poll tax during the 1st century AD, other historic events that originated as tax revolts include the Magna Carta, the American Revolution and the French Revolution. War tax resisters often highlight the relationship between tax and war. Tax resisters come from a range of backgrounds with diverse ideologies. For example, Henry David Thoreau and William Lloyd Garrison drew inspiration from the American Revolution, some tax resisters refuse to pay tax because their conscience will not allow them to fund war, whilst others resist tax as part of a campaign to overthrow the government. Some taxpayers pay their taxes, but include protest letters along with their tax forms, others pay in a protesting form — for instance, by writing their cheque on a toilet seat or a mock-up of a missile. Others pay in a way that creates inconvenience for the collector — for instance, other tax resisters change their lifestyles so that they owe less tax. For example, UK citizens pay no income tax if their income is below the personal allowance. Opposition to war has led some, such as Ammon Hennacy and Ellen Thomas and these individuals believe that their government is engaged in immoral, unethical or destructive activities such as war, and paying taxes inevitably funds these activities. A resister may decide to reduce their tax paid through tax evasion. For instance, one way to evade tax is to only work for cash-in-hand. Some tax resisters refuse to pay all or a portion of the taxes due, in this way, they demonstrate that the intent of their resistance is not selfish and that they want to use a portion of their earnings to contribute to the common good
4.
Smuggling
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There are various motivations to smuggle. Examples of non-financial motivations include bringing banned items past a security checkpoint or the removal of classified documents from a government or corporate office, Smuggling is a common theme in literature, from Bizets opera Carmen to the James Bond spy books Diamonds are Forever and Goldfinger. The verb smuggle, from Low German schmuggeln or Dutch smokkelen, apparently a frequentative formation of a meaning to sneak. Smuggling has a long and controversial history, probably dating back to the first time at which duties were imposed in any form, in England smuggling first became a recognised problem in the 13th century, following the creation of a national customs collection system by Edward I in 1275. Medieval smuggling tended to focus on the export of highly taxed export goods — notably wool, merchants also, however, sometimes smuggled other goods to circumvent prohibitions or embargoes on particular trades. Most studies of historical smuggling have been based on official sources — such as court records, according to Dr Evan Jones, the trouble with these is that they only detail the activities of those dumb enough to get caught. This has led him and others, such as Prof Huw Bowen to use records to reconstruct smuggling businesses. Grain smuggling by members of the elite, often working closely with corrupt customs officers, has also been shown to have been prevalent in East Anglia during the later 16th century. In England wool was smuggled to the continent in the 17th century, the principal reason for the high duty was the need for the government to finance a number of extremely expensive wars with France and the United States. The thievery was boasted about and romanticized until it seemed a kind of heroism and it did not have any taint of criminality and the whole of the south coast had pockets vying with one another over whose smugglers were the darkest or most daring. The Smugglers Inn was one of the commonest names for a bar on the coast, in Henley Road, smuggling in colonial times was a reaction to the heavy taxes and regulations imposed by mercantilist trade policies. After American independence in 1783, smuggling developed at the edges of the United States at places like Passamaquoddy Bay, St. Marys in Georgia, Lake Champlain, and Louisiana. During Thomas Jeffersons embargo of 1807-1809, these places became the primary places where goods were smuggled out of the nation in defiance of the law. Like Britain, a gradual liberalization of laws as part of the free trade movement meant less smuggling. In 1907 President Theodore Roosevelt tried to cut down on smuggling by establishing the Roosevelt Reservation along the United States-Mexico Border, Smuggling revived in the 1920s during Prohibition, and drug smuggling became a major problem after 1970. In the 1990s, when sanctions were imposed on Serbia. The state unofficially allowed this to continue or otherwise the entire economy would have collapsed, much smuggling occurs when enterprising merchants attempt to supply demand for a good or service that is illegal or heavily taxed. As a result, illegal trafficking, and the smuggling of weapons, as well as the historical staples of smuggling, alcohol
5.
Black market
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Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. Examples include the trade, prostitution, illegal currency transactions. Violations of the tax code involving income tax evasion constitutes membership in the unreported economy, because tax evasion or participation in a black market activity is illegal, participants will attempt to hide their behavior from the government or regulatory authority. Cash usage is the medium of exchange in illegal transactions since cash usage does not leave a footprint. Common motives for operating in markets are to trade contraband, avoid taxes and regulations. Typically the totality of such activity is referred to with the article as a complement to the official economies, by market for such goods and services. Black money is the proceeds of a transaction, on which income and other taxes have not been paid. Because of the nature of the black economy it is not possible to determine its size. There is no single underground economy, there are many and these underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing. Different types of activities are distinguished according to the particular institutional rules that they violate. Illegal economy participants engage in the production and distribution of prohibited goods and services, such as trafficking, arms trafficking. The unreported economy consists of economic activities that circumvent or evade the institutionally established fiscal rules as codified in the tax code. A summary measure of the economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the economy is the tax gap. In the U. S. unreported income is estimated to be $2 trillion resulting in a tax gap of $450–$500 billion, the unrecorded economy consists of those economic activities that circumvent the institutional rules that define the reporting requirements of government statistical agencies. A summary measure of the economy is the amount of unrecorded income. Unrecorded income is a problem in transition countries that switched from a socialist accounting system to UN standard national accounting. New methods have been proposed for estimating the size of the unrecorded economy, but there is still little consensus concerning the size of the unreported economies of transition countries
6.
Progressive tax
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A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term progressive refers to the way the tax rate progresses from low to high, the term can be applied to individual taxes or to a tax system as a whole, a year, multi-year, or lifetime. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with an ability to pay. The opposite of a tax is a regressive tax, where the relative tax rate or burden decreases as an individuals ability to pay increases. The term is applied in reference to personal income taxes. It can also apply to adjustments of the tax base by using tax exemptions, tax credits, Progressive taxation has also been positively associated with happiness, the subjective well-being of nations and citizen satisfaction with public goods, such as education and transportation. In the early days of the Roman Republic, public taxes consisted of assessments on owned wealth, the tax rate under normal circumstances was 1% of property value, and could sometimes climb as high as 3% in situations such as war. These taxes were levied against land, homes and other estate, slaves, animals, personal items. By 167 BC, Rome no longer needed to levy a tax against its citizens in the Italian peninsula, due to the riches acquired from conquered provinces. The first modern income tax was introduced in Britain by Prime Minister William Pitt the Younger in his budget of December 1798, to pay for weapons and equipment for the French Revolutionary War. Pitts new graduated income tax began at a levy of 2 old pence in the pound on incomes over £60, Pitt hoped that the new income tax would raise £10 million, but actual receipts for 1799 totalled just over £6 million. Pitts income tax was levied from 1799 to 1802, when it was abolished by Henry Addington during the Peace of Amiens, Addington had taken over as prime minister in 1801, after Pitts resignation over Catholic Emancipation. The income tax was reintroduced by Addington in 1803 when hostilities recommenced, the United Kingdom income tax was reintroduced by Sir Robert Peel in the Income Tax Act 1842. Peel, as a Conservative, had opposed income tax in the 1841 general election, the new income tax, based on Addingtons model, was imposed on incomes above £150. Although this measure was intended to be temporary, it soon became a fixture of the British taxation system. A committee was formed in 1851 under Joseph Hume to investigate the matter, despite the vociferous objection, William Gladstone, Chancellor of the Exchequer from 1852, kept the progressive income tax, and extended it to cover the costs of the Crimean War. By the 1860s, the tax had become a grudgingly accepted element of the English fiscal system. In the United States, the first progressive income tax was established by the Revenue Act of 1862 and this was signed into law by President Abraham Lincoln and repealed the flat tax, which had been brought in under the Revenue Act of 1861
7.
Theories of taxation
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Several theories of taxation exist in public economics. Governments at all levels need to raise revenue from a variety of sources to finance public-sector expenditures, adam Smith in The Wealth of Nations wrote, Such things as defending the country and maintaining the institutions of good government are of general benefit to the public. Thus, it is reasonable that the population as a whole should contribute to the tax costs and they are proportionate to incomes or abilities to pay certain rather than arbitrary payable at times and in ways convenient to the taxpayers and cheap to administer and collect. In modern public-finance literature, there have two main issues, who can pay and who can benefit. Influential theories have been the ability theory presented by Arthur Cecil Pigou, there is a later version of the benefit theory known as the voluntary exchange theory. Under the benefit theory, tax levels are determined, because taxpayers pay proportionately for the government benefits they receive. In other words, the individuals who benefit the most from public services pay the most taxes, here, two models adopting the benefit approach are discussed, the Lindahl model and the Bowen model. DDa is the curve of taxpayer A, and DDb is the demand curve of taxpayer B. The vertical summation of the two demand curves results in the total demand schedule for state services. A and B pay different proportions of the cost of the services, when ON is the amount of state services produced, A contributes NE and B contributes NF, the cost of supply is NG. Since the state is non-profit, it increases its supply to OM, at this level, A contributes MJ and B contributes MR. Equilibrium is reached at point P on a voluntary-exchange basis, bowen’s model has more operational significance, since it demonstrates that when social goods are produced under conditions of increasing costs, the opportunity cost of private goods is foregone. For example, if there is one good and two taxpayers, their demand for social goods is represented by a and b, therefore. The supply curve is shown by a+b, indicating that goods are produced under conditions of increasing cost, the production cost of social goods is the value of foregone private goods, this means that a+b is also the demand curve of private goods. Simultaneously, the tax shares of A and B are determined by their individual demand schedules, the total tax requirement is the area out of which A is willing to pay GCEO and B is willing to pay FDEO. The advantage of the theory is the direct correlation between revenue and expenditure in a budget. It approximates market behaviour in the procedures of the public sector. Taxes are based on ability to pay, there is no quid pro quo
8.
Laffer curve
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In economics, the Laffer curve is a representation of the relationship between rates of taxation and the resulting levels of government revenue. Proponents of the Laffer curve claim that it illustrates the concept of taxable income elasticity—i. e, taxable income will change in response to changes in the rate of taxation. The Laffer curve postulates that no tax revenue will be raised at the tax rates of 0% and 100%. The shape of the curve is uncertain and disputed, one implication of the Laffer curve is that increasing tax rates beyond a certain point will be counter-productive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated, the New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%. The term Laffer curve was coined by Jude Wanniski, who was present at the meeting. The basic concept was not new, Laffer himself notes antecedents in the writings of the 14th-century social philosopher Ibn Khaldun, Laffer explains the model in terms of two interacting effects of taxation, an arithmetic effect and an economic effect. The arithmetic effect assumes that tax revenue raised is the tax rate multiplied by the revenue available for taxation, thus revenue R is equal to t×B where t is the tax rate and B is the taxable base. At a 0% tax rate, the model assumes that no tax revenue is raised, the economic effect assumes that the tax rate will affect the tax base itself. Thus, the effect of a 100% tax rate is to decrease the tax base to zero. If this is the case, then somewhere between 0% and 100% lies a tax rate that will maximize revenue, similarly, the curve is often presented as a parabolic shape, but there is no reason that this is necessarily the case. The effect of changes in tax can be cased in terms of elasticities, thus as elasticity surpasses one absolute value, revenues begin to fall. The problem is similar to that of the monopolist who must never increase prices beyond the point at which the elasticity of demand exceeds one in absolute value. Wanniski noted that all activity would be unlikely to cease at 100% taxation. He also noted that there can be special circumstances in which economic activity can continue for a period at a near 100% taxation rate, various efforts have been made to quantify the relationship between tax revenue and tax rates. While the interaction between tax rates and tax revenue is generally accepted, the nature of this interaction is debated. In practice, the shape of a hypothetical Laffer curve for an economy can only be estimated. The relationship between tax rate and tax revenue is likely to vary from one economy to another and depends on the elasticity of supply for labor, even in the same economy, the characteristics of the curve could vary over time
9.
Tax
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A tax is a financial charge or other levy imposed upon a taxpayer by a state or the functional equivalent of a state to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent, the legal definition and the economic definition of taxes differ in that economists do not regard many transfers to governments as taxes. For example, some transfers to the sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments, governments also obtain resources by creating money and coins, through voluntary gifts, by imposing penalties, by borrowing, and by confiscating wealth. In modern taxation systems, governments levy taxes in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states, the method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as the Canada Revenue Agency, when taxes are not fully paid, the state may impose civil penalties or criminal penalties on the non-paying entity or individual. The levying of taxes aims to raise revenue to fund governing and/or to alter prices in order to affect demand, States and their functional equivalents throughout history have used money provided by taxation to carry out many functions. A governments ability to raise taxes is called its fiscal capacity, when expenditures exceed tax revenue, a government accumulates debt. A portion of taxes may be used to service past debts, governments also use taxes to fund welfare and public services. These services can include education systems, pensions for the elderly, unemployment benefits, energy, water and waste management systems are also common public utilities. A tax effectively changes relative prices of products and they have therefore sought to identify the kind of tax system that would minimize this distortion. Governments use different kinds of taxes and vary the tax rates, historically, taxes on the poor supported the nobility, modern social-security systems aim to support the poor, the disabled, or the retired by taxes on those who are still working. A states tax system often reflects its communal values and the values of those in current political power. To create a system of taxation, a state must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing or administering the tax system, in countries where the public does not have a significant amount of influence over the system of taxation, that system may reflect more closely the values of those in power. All large businesses incur administrative costs in the process of delivering revenue collected from customers to the suppliers of the goods or services being purchased. Taxation is no different, the resource collected from the public through taxation is always greater than the amount which can be used by the government, the difference is called the compliance cost and includes the labour cost and other expenses incurred in complying with tax laws and rules
10.
Tax law
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Tax law is an area of legal study dealing with the constitutional, common-law, statutory, tax treaty, and regulatory rules that constitute the law applicable to taxation. Primary taxation issues facing the world over include, Taxes on income. Taxation of capital gains versus labor income, ecotax refers to taxes intended to promote environmentally friendly activities via economic incentives. Tax evasion and avoidance leading to reduced government revenue, due to an Inefficient tax system in many underdeveloped countries, the majority of small businesses are not taxed. In law schools, tax law is a sub-discipline and area of specialist study, U. S. law schools require 30 semester credit hours of required courses,60 hours or more of electives and a combined total of at least 90 credit hours completed. Law students must choose available courses on which to focus before graduation with the J. D. degree in the United States. S, Master of Laws programs are offered in Canada, United States, United Kingdom, Australia, Netherlands and an increasing number of countries. Many of these focus on domestic and international taxation. In the United States, most LL. M, programs require that the candidate be a graduate of an American Bar Association-accredited law school. In other countries a graduate law degree is sufficient for admission to LL. M. in Taxation law programs, the Master of Laws program is an advanced legal study. General Requirements J. D. or First degree in law, an English proficiency test score for students with a native language besides English. The Juris Doctor program is offered by only a number of countries and these include, United States, Australia, Canada, Hong Kong, Japan, Philippines, Singapore and the United Kingdom. The courses vary in duration of years, curriculum and whether or not further training is required, law School Admission Test - Required for law school admission in United States, Canada and a growing number of countries. A list of tax faculty ranked by publication downloads is maintained by Paul Caron at TaxProf Blog
11.
Tax reform
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Tax reform is the process of changing the way taxes are collected or managed by the government and is usually undertaken to improve tax administration or to provide economic or social benefits. Numerous organizations have set up to reform tax systems worldwide. Other reforms propose tax systems that attempt to deal with externalities, such reforms are sometimes proposed to be revenue-neutral, for example in revenue neutrality of the FairTax, meaning they ought not result in more tax or less being collected. Georgism claims that various forms of tax can both deal with externalities and improve productivity. Tax reform is a significant issue on the Australian political agenda. Combined annual deficits of the Commonwealth and State and territory governments will rise from 1. 9% of gross domestic product in 2011–12 to 5. 9% of GDP by 2049–50. Widespread, wholesale tax reform in Australia has not occurred since the introduction of the Goods, the Henry Tax Review identified 138 areas for significant reform to Australias tax system over the next 10 to 20 years. In July 2013, PricewaterhouseCoopers proposed significant tax reform in the context of an ageing population, for example, over 115 other taxes raise less revenue than one tax, the Goods and Services Tax. This Report received widespread coverage in the Australian press, there have been many movements in the United States to reform the collection and management of taxes. During the late 19th century, American economist Henry George started a movement for tax reform. The aim of the movement was the abolition of all forms of other than the Single Tax on land value. The effects of the movement on taxation policy, although diminished, can be seen in parts of the world including Australia, New Zealand, Hong Kong, Taiwan. Efforts to promote this form of tax reform in the United States continue under the aegis of such as The Henry George Foundation of America. In 1986, landmark tax reform was passed in the Tax Reform Act of 1986, in the 1990s, reform proposals arose over the double-taxation of corporate income, with a large report in 1992 by the Internal Revenue Service. During the Bush administration, the Presidents Advisory Panel for Federal Tax Reform recommended the removal of the Alternative Minimum Tax. Several organizations are working for tax reform in the United States including Americans for Tax Reform, Americans For Fair Taxation, various proposals have been put forth for tax simplification in the United States, including the FairTax and various flat tax plans and bipartisan tax reform proposals. Representative Chaka Fattah of Pennsylvania introduced a bill, H. R.4646, called the Debt Free America Act that would introduce a 1% financial transaction tax and eliminate federal income tax. He has introduced bills calling for tax reform since 2004
