Inflation and the Personal Income Tax

Allen, Richard; Savage, David

doi:10.1177/002795017407000107

Cited by 3 publications

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“…The paper benefited ! rom exposure in Seminar E.g., Viner (1923) ; Keynes (19 0); Mishan and Dick- Mireaux (1 958); Turvey (1961); Morag (1965) ; Oakland (1973); Binner (1973); Blinder (1973); Allan and Savage (1974); von Furstenburg (1975); Pitchford and Turnovsky (1975/ 76) ; Aaron (1 976d76b); Tideman and Tucker (1 976); Gramlich (1976); Feldstein (1976); Feldstein, Green and Sheshinski (1978); Feldstein and Slemrod (1978); Feldstein and Summers (1978) ; Auld (1977); Diamond (1977); Modigliani and Cohn (1979) ; Hartman (1979); Boadway, Bruce and Mintz (1982/84). E.g., Kirkman (1974); Fellner, Clarkson and Moore (1974/75); Sandilands (1975); Davidson andWeil (1976, 1978); Vancil and Weil (1976) ;Scapens (1977); Shoven and Bulow (1975/76); Kennedy (1978); FASB (1979); Nowotny (1 980); Bloom and Debessay (1 984).…”

Section: Conclusion and Limitations Of The Researchmentioning

confidence: 99%

Inflation, Accounting and the Canadian Corporate Tax Base

Daniel

1987

Can J Adm Sci

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Relationships between 1983 income tax paid and newly reported, inflation‐adjusted measures of net income are examined. Canadian corporations in the sample paid about half of the 1983 income taxes collected from Canadian, non‐financial enterprises with assets exceeding $10 million. If the measures of net income are accepted as valid, then it can be inferred that in 1983, Canada's corporate tax system acted as if: Income maintaining operating capability was taxed at a relatively low marginal rate (approximately 26 per cent). Realized holding gains, allegedly required by firms to maintain operating capability and therefore not to be taxed, were taxed at a relatively high marginal rate (about 59 per cent). Purchasing power gains on net monetary liabilities, which are in substance returns of principal to lenders, were confiscated (i.e., taxed at more than 100 per cent). If income maintaining operating capability plus purchasing power gains had been taxed explicitly, and if all other allowances and deductions had been abolished, a 51 per cent tax rate would have maintained the government's tax revenues from firms that had positive taxable income in 1983. However, the tax burden would have shifted toward manufacturers and resource firms, and away from retailers, wholesalers, and, regulated utilities. The paper explains how the new accounting income constructs are computed, analyzes the apparent incidence of tax payable on various components of income using cross‐sectional regression models, and discusses the significance of the findings for corporate tax policy. Evaluation of the results of the study raises interesting normative issues. One interpretation is that the government over‐taxed realized holding gains that the corporations needed to maintain their operating capability. Another is that the tax system rewarded (perhaps unintentionally) corporations that were efficient in producing income maintaining operating capability. Résumé Les rapports entre l'impot sur le revenu payé en 1983 et les nouvelles mesures de revenu net indexées à l'inflation sont examinées ici. Les sociétés canadiennes de l'échantillonnage ont payé environ la moitié des impots levés auprès des entreprises canadiennes non financières dont l'actif excédait $ 10 millions. Si les mesures de revenu net sont acceptées comme valides, on peut alors conclure qu'en 1983 le système fiscal Ides sociétés a eu l'effet suivant: La capacité d'exploitation assurant les revenus a étép imposée à un taux marginal relativement bas (environ 26%). Les gains de plus‐value qui sont soi‐disant nécessaires pour maintenir la capacité d'exploitation et qui ne devraient donc pas ětre imposés, l'ont été à un taux marginal relativement élevé (environ 59%). Les gains de pouvoirs d'achat sur la dette nette, qui constituent en fait un remboursement de principal au prěteur, ont été confisqués (c.‐à.‐d. imposés à plus de 100%). Si la capacité d'exploitation et les gains de pouvoir d'achat avaient été imposés plus spécifiquement, et si toutes les allocations et les déduction...

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Section: Conclusion and Limitations Of The Researchmentioning

confidence: 99%

Inflation, Accounting and the Canadian Corporate Tax Base

Daniel

1987

Can J Adm Sci

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“…Second, there is a s ecific tendency to move into owner-occupier housing simply because the service income yieycled by the asset, unlike financial income yielded by other assets, has not been subjcct to income tax since 'Schedule A' income taxation on housing services was abolished in 1964. Inasmuch as inflation pushes individuals into higher tax brackets in the progressive income tax system (see Allen and Savage (1974) for evidence that this has been the case in recent inflationary experiences) then there will be an increasing tendency to substitute tax-free income for taxable income. Third, the demand for owner-occupier housing may simply be stimulated by thc demand for mortgage debt itself when the latter is offered at negative real rates of interest.…”

Section: Aggregate Estimates Of Inflationary Redistributionmentioning

confidence: 99%

The Redistributive Effect of Inflation on Building Society Shares and Deposits: 1961–74

Foster¹

1976

Bulletin of Econ Res

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“…See, for example, Allen and Savage (1974); Collins (1977). It can also be used to calculate the degree of effective indexation implied by proposed packages of tax changes, although it has not been used in this way for the purposes of the present paper.…”

mentioning

confidence: 99%

Australian Personal Income Tax Liabilities 1960–1980

Collins¹

1982

J of App Econs and Policy

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Inflation and the Personal Income Tax

Cited by 3 publications

References 0 publications

Inflation, Accounting and the Canadian Corporate Tax Base

Inflation, Accounting and the Canadian Corporate Tax Base

The Redistributive Effect of Inflation on Building Society Shares and Deposits: 1961–74

Australian Personal Income Tax Liabilities 1960–1980

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