Imputed Income Research Articles

Abolishment of a tax on imputed income: consequences for business and budget

The article purpose is to investigate changes of taxpayers in the simplified and patent taxation system, in the structure of tax revenues of regional and local budgets, in the tax burden on taxpayers that occurred in connection with the abolition of tax on imputed income (from 2021). The research used generally accepted methods of scientific cognition, such as analysis, synthesis, generalization, grouping, tabular method. The information base of the study was the Tax Code of the Russian Federation, official reporting data of the Federal Tax Service of Russian Federation, authors’ publications on the topic under study. The study obtained the following results. The tax revenues of local budgets decreased, having lost the source of income in the form of tax on imputed income, previously credited in full; the tax burden on taxpayers increased (when tax on imputed income was applied, it was minimal). The main conclusion of the study is the fact that the patent taxation system, which can be applied by entrepreneurs who have ceased to be payers of tax on imputed income, needs a radical transformation. It is necessary to improve the efficiency of such system in terms of determining the amount of income from which the cost of a patent is calculated.

Типология сельскохозяйственных организаций как субъектов сельской локальной экономики

Agricultural organizations act as key agricultural producers. They account for more than half of the value of agricultural products produced in 2021. Consequently, in the process of analyzing the rural local economy, typologization of agricultural organizations is also necessary. The value of imputed income acts as an indicator by which the ranking of agricultural organizations is carried out. The typologization is based on the method of ranking by multiply increasing intervals of fluctuations in imputed income, since in this case it is possible to obtain a distribution of agricultural organizations close to normal. Within the framework of this study, we have obtained three typological groups of agricultural organizations: farms with low, medium and high income.

Reduction in the importance of indirect methods of assessing the taxable base in the conditions of digitalization of the economy

Starting from January 1, 2021, the uniform tax on imputed income (UTII) has been cancelled. According to the Federal Tax Service, 96.2% of the subjects who paid UTII have already chosen an alternative tax regime. At the same time, in society, scientific and professional communities, and among business representatives, there are different points of view on this problem, opinions are expressed about the need to preserve indirect methods for assessing the taxable base, and UTII in particular. The state initially had a plan to abandon UTII and consistently implemented the abandonment of indirect methods of assessing the taxable base, implemented under imputed taxation (UTII), and the transition to fair taxation (STS, CTS) based on real income. The introduction of special tax regimes based on fair taxation has contributed to the growth of tax collections and an increase in the number of business entities that have chosen these regimes. Based on the results of the paper, conclusions are presented that can be used in analyzing the prospects for the development of tax systems.

Leading Predictors of COVID-19-Related Poor Mental Health in Adult Asian Indians: An Application of Extreme Gradient Boosting and Shapley Additive Explanations.

During the COVID-19 pandemic, an increase in poor mental health among Asian Indians was observed in the United States. However, the leading predictors of poor mental health during the COVID-19 pandemic in Asian Indians remained unknown. A cross-sectional online survey was administered to self-identified Asian Indians aged 18 and older (N = 289). Survey collected information on demographic and socio-economic characteristics and the COVID-19 burden. Two novel machine learning techniques-eXtreme Gradient Boosting and Shapley Additive exPlanations (SHAP) were used to identify the leading predictors and explain their associations with poor mental health. A majority of the study participants were female (65.1%), below 50 years of age (73.3%), and had income ≥ $75,000 (81.0%). The six leading predictors of poor mental health among Asian Indians were sleep disturbance, age, general health, income, wearing a mask, and self-reported discrimination. SHAP plots indicated that higher age, wearing a mask, and maintaining social distancing all the time were negatively associated with poor mental health while having sleep disturbance and imputed income levels were positively associated with poor mental health. The model performance metrics indicated high accuracy (0.77), precision (0.78), F1 score (0.77), recall (0.77), and AUROC (0.87). Nearly one in two adults reported poor mental health, and one in five reported sleep disturbance. Findings from our study suggest a paradoxical relationship between income and poor mental health; further studies are needed to confirm our study findings. Sleep disturbance and perceived discrimination can be targeted through tailored intervention to reduce the risk of poor mental health in Asian Indians.

Migration, housing constraints, and inequality: A quantitative analysis of China

We investigate the role of migration and housing constraints in determining income inequality within and across Chinese cities. Combining microdata and a spatial equilibrium model, we quantify the impact of the massive spatial reallocation of workers and the rapid growth of housing costs on the national income distribution. We first show several stylized facts detailing the strong positive correlation between migration flows, housing costs, and imputed income inequality among Chinese cities. We then build a spatial equilibrium model featuring workers with heterogeneous skills, housing constraints, and heterogeneous returns from housing ownership to explain these facts. Our quantitative results indicate that reductions in migration costs and the divergent growth in productivity across cities and skills result in the observed massive migration to developed areas. Combined with tight land supply policies in big cities, the expansion of housing demand caused the rapid growth of housing costs and increased inequality between local housing owners and migrants. The counterfactual analysis shows that a migration-based land supply reform with regional transfers or a US-level property tax can lower within-city income inequality by 34% and 21%, respectively. Meanwhile, both reforms lower national income inequality by 20%. However, only the land supply reform encourages more workers to migrate to higher productivity cities.

Accessions to Wealth, Realization of Gross Income, and Dominion and Control: Applying the “Claim of Right Doctrine” to Found Objects, Including Record-Setting Baseballs

This article explores the tax treatment of certain in-kind receipts of property, namely, windfall found objects. The basic and unremarkable thesis is that in-kind property windfalls (commonly referred to as “found objects”) are gross income when received. However, there is more than meets the eye here: the finder of a found object often does not obtain clear legal title, so there exists a possibility that the item might have to be returned to its rightful owner. This possibility of having to return the item raises two issues seriatim. The first is that the income represented by the found object may not be immediately realized due to the forfeiture condition and attendant valuation problems. This approach is explored but rejected. At this point the solution appears to be including the item in gross income upon receipt and claiming a deduction if and when the item is returned. This approach is commonly referred to as the “claim of right doctrine,” although, after James v. United States, its operation no longer is conditioned on the taxpayer’s having a “claim of right.” In any event, the application of this doctrine to in-kind property (as opposed to cash) is somewhat problematic, but I argue in favor of this approach. The conclusion is that the object should be included upon receipt, but that the idea of “receipt” can here be rendered in a flexible fashion so as to allow for a disclaimer or its functional equivalent.The endeavor might be vulnerable to the charge of being “much ado about nothing” were it not for a recent piece by Professors Lawrence Zelenak and Martin McMahon arguing that found objects, such as record-setting home run baseballs, are not “residual” gross income upon acquisition. Zelenak and McMahon justify their thesis by analogy first to imputed income and then to self-created assets, which are not taxed until (and if) they are sold or exchanged. Moreover, Zelenak and McMahon suggest that Regulations section 1.61-14(a), which cites “treasure trove” as being an example of in-kind gross income, is probably invalid or, if it is not, should be withdrawn.

Reconciling remote learning with imputed income for custodial parents

AbstractOne of the logical, yet seemingly unanticipated, effects of the COVID‐19 pandemic has been the exodus of parents, primarily mothers, from the workplace. An October 2020 Pew study indicates that as many as 30% of parents reduced work hours or left the workforce all together, with a pronounced burden falling on working mothers. This paper examines one possible consequence of voluntary under‐ or unemployment by these parents: imputed income for the purposes of calculating child support. Forecasters predict that remote learning is now an option schools will likely turn to again to address all sorts of possible problems from environmental disasters to flu outbreaks. Family law practitioners should be prepared to deal with this likelihood, and should be ready to address the possible effects on child support with their clients.

Estimating intergenerational income mobility on sub-optimal data: a machine learning approach

Much of the global evidence on intergenerational income mobility is based on sub-optimal data. In particular, two-stage techniques are widely used to impute parental incomes for analyses of lower-income countries and for estimating long-run trends across multiple generations and historical periods. We propose applying machine learning methods to improve the reliability and comparability of such estimates. Supervised learning algorithms minimize the out-of-sample prediction error in the parental income imputation and provide an objective criterion for choosing across different specifications of the first-stage equation. We use our approach on data from the United States and South Africa to show that under common conditions it can limit the bias generally associated to mobility estimates based on imputed parental income.

Current problems of the patent tax system

The patent system of taxation in the Russian Federation and the conditions for its application have changed several times since 2006. In connection with the abolition of the single imputed income tax from 2021, the relevance of the application of the patent tax system increases. The article analyses the development of the patent tax system, its role in budget revenues, identifies positive and negative aspects, and problematic issues of its application in connection with the changes made since 2021. The authors carried out a comparative study of statistical data on taxation for the city of Moscow and the Chuvash Republic. The paper performed the theoretical calculation of the potential annual income for certain types of economic activity in the conditions of the updated patent taxation system for the city of Moscow and certain regions: the Republic of Tatarstan, the Chuvash Republic and the Republic of Mari El. According to the results of the study, it is concluded that it is advisable to regulate the cost of patents for the subjects of the Russian Federation.

ON THE IMPACT OF THE TAXATION SYSTEM OF SMALL AND MEDIUM-SIZED BUSINESSES ON THE FORMATION OF REGIONAL AND LOCAL BUDGETS (BASED ON THE MATERIALS OF THE ALTAI TERRITORY AND BARNAUL)

In the new conditions of the crisis caused by the coronavirus infection, enterprises are in dire need of support from the state. The old taxation system made it impossible to use. The state has proposed new approaches to taxation of small and medium-sized businesses. The main reasons for changes in legislation related to the abolition of UTII and the application of new tax regimes have been identified. The article discusses the advantages and disadvantages of using a single tax on imputed tax, replacing this tax with a patent taxation system and a self-taxation system. The retrospective of the application of UTII is analyzed and carried out, the results of its application are considered.
 On the example of a specific region, the Altai Territory, the number of taxpayers who used the unified imputed income tax (UTII) and the prospect of paying tax under the new patent system were analyzed. The article discusses the results of the tax reform and the features of its implementation during the period of coronavirus infection.
 The article discusses the specifics of the application of the patent system in various industries, since the Altai Territory has an agricultural focus, in contrast to other regions. An attempt was also made to calculate the budget revenues of the city of Barnaul, subject to the transition to a new taxation system, optimistic conclusions and assumptions about a positive trend in income growth were made.

Abolition of the unified tax on imputed income as a life stage of the small business tax system

Abolition of the unified tax on imputed income as a life stage of the small business tax system

Unified tax on imputed income: cancellation and consequences

Unified tax on imputed income: cancellation and consequences

OPTIMIZING THE CHOICE OF TAX REGIMES BY BUSINESS ENTITIES

The article is devoted to the abolition of the tax regime from 2021 in the form of the single tax on imputed income. Some of the requirements imposed by the state for each tax regime providing preferential tax treatment, excluding the standard taxation scheme, were presented. The taxation regimes that can be chosen by small businesses in view of the abolition of the single tax on imputed income were proposed.

A discrete choice modeling approach to measure susceptibility and subjective valuation of the decoy effect, with an application to route choice

The decoy effect reveals a potential violation of the regularity assumption, which is a building block of canonical discrete choice models. This effect has been detected in various choice contexts, but the susceptibility to it and its subjective valuation have been scarcely studied before. This paper proposes, illustrates and assesses two methodologies aimed to fill this gap: systematic taste variations and latent classes. The first approach uses a logit model that accounts for the decoy effect by an emergent value term which coefficient varies among groups of individuals defined by exogenous variables. The second method uses a similar scheme but accounts for heterogeneity, instead, by using three variations of the latent classes approach. This article illustrates and assesses the proposed methods using a case study build from a stated preferences route choice problem that depicts a hypothetical Saturday afternoon car shopping trip. Results show first that both methods are feasible for analyzing the decoy effect and that only respondent's age and response time seem to play a clear role in decoy's susceptibility in the case study. On the contrary, no noticeable impact on susceptibility is detected for gender, imputed income, motorization rate, household size and whether the survey was conducted in person or online. Finally, regarding decoy's subjective valuation, evidence from this case study suggests that presenting the decoy was, on average, as large as reducing about one fourth of the travel time, or between one fourth and one half of the travel cost displayed to the interviewees.

РЕГИОНАЛЬНЫЕ АСПЕКТЫ НАЛОГООБЛОЖЕНИЯ В УСЛОВИЯХ ОТМЕНЫ ЕНВД

Over the past years, the unified tax on imputed income has been the most convenient, effective, simple and economical for the majority of individual entrepreneurs in our country. Now entrepreneurs should abandon this tax regime. A very topical issue is the choice of the taxation system that will minimize budgetary obligations. Based on the Rosstat data, individual entrepreneurs occupy a fairly high share in the total population of entrepreneurs in this country. Taking into account the fact that the Republic of Adygea is an agricultural one, and in addition to standard cargo transportation, many individual entrepreneurs are also engaged in the transportation of agricultural products, we have selected this particular segment for research. The paper provides a comparative analysis of taxation systems that can be used by entrepreneurs providing freight services in the Republic of Adygea. For clarity, we examined such tax systems and special tax regimes as: tax on professional income, patent system, simplified “Income” taxation system. For each of the systems, both the advantages of its application and the disadvantages are systematized. The patent system may only have its own benefits for entrepreneurs operating in only one region and without employees. Professional income tax is similar to the simplified “Income” tax system. Only with this option there is no possibility of using the tax deduction of fixed contributions for pension and social insurance. The calculations and recommendations presented in the work will help individual entrepreneurs make the right choice. The most optimal variant can be chosen only by the entrepreneur himself, basing on the peculiarities of the entrepreneurial activity.

Imputing Top‐Coded Income Data in Longitudinal Surveys*

AbstractThe incomes of top earners are typically top‐coded in survey data. I show that the accuracy of imputed income values for top earners in longitudinal surveys can be improved significantly by incorporating information from multiple time periods into the imputation process in a simple way. Moreover, I introduce an innovative, nonparametric empirical Bayes imputation method that further improves imputation quality. I show that the empirical Bayes imputation method reduces the RMSE of imputed income values by 19–51% relative to standard approaches in the literature. I also illustrate the benefits of the empirical Bayes method for investigating multi‐year income inequality.

Migration, Housing Constraints, and Inequality: A Quantitative Analysis of China

We investigate the role of migration and housing constraints in determining income inequality within and across Chinese cities. Combining microdata and a spatial equilibrium model, we quantify the impact of the massive spatial reallocation of workers and the rapid growth of housing costs on the national income distribution. We first show several stylized facts detailing the strong positive correlation between migration flows, housing costs, and imputed income inequality among Chinese cities. We then build a spatial equilibrium model featuring workers with heterogeneous skills, housing constraints, and heterogeneous returns from housing ownership to explain these facts. Our quantitative results indicate that reductions in migration costs and the divergent growth in productivity across cities and skills result in the observed massive migration to developed areas. Combined with tight land supply policies in big cities, the expansion of the housing demand causes the rapid growth of housing costs and increases the inequality between local housing owners and migrants. The counterfactual analysis shows that a migration-based land supply reform with regional transfers or a US-level property tax both lower within-city income inequality, by 34% and 21%, respectively. Meanwhile, both reforms lower national income inequality by 20%. However, only the land supply reform encourages more workers to migrate to higher productivity cities.

МАЛЫЙ БИЗНЕС БЕЗ ЕНВД: ВЫБОР СПЕЦИАЛЬНОГО НАЛОГОВОГО РЕЖИМА ДЛЯ ИНДИВИДУАЛЬНЫХ ПРЕДПРИНИМАТЕЛЕЙ, ЗАНЯТЫХ В СФЕРЕ УСЛУГ

The article examines the question of choosing the optimal taxation regime in the service sector in con-nection with the abolition from January 1, 2021 of the Chapter 26.3 of the Tax Code of the Russian Federation governing the system of single tax on imputed income. Based on the example of an individual entrepreneur representing hairdressing and cosmetic services, calculations have been made and a comparative analysis of the fiscal burden that has arisen in the case of applying a simplified taxation system, patent system or the transition to payment of professional income tax has been carried out. Corresponding calculations were per-formed under the conditions of 2020 in force in the Moscow region.

ОЦЕНКА НАЛОГОВОЙ НАГРУЗКИ МАЛОМАСШТАБНОЙ ПИЩЕВОЙ ПРОМЫШЛЕННОСТИ

The observed high shadow activity in small business requires scientific search for the causes of this institutional trap. Tax burden is considered to be a key factor of its existence. The study is aimed at assessing tax burden of small industrial enterprises in terms of its adequacy to developed countries. Methodology of the study is based on the supply-side economics theory, namely the well-known concept of the Laffer curve. The research applies classical methods such as tax burden calculation, economic modeling based on small food industry, as well as comparative analysis of tax burden in Russia with the same taxation in a country with high level of small business development (USA). Such business formats as an individual entrepreneur (similar to the US Sole Proprietorships) and OOO (similar to the US – Limited Liability Company) are considered. The comparison allows us to make a conclusion on tax burden adequacy in the Russian Federation for small industrial enterprises, subject to availability of special tax regimes in the form of Patent tax system and Unified Imputed Income Tax (UIIT). Another important conclusion of the article is that small business, which has no opportunity and benefits to apply special regimes, bears increased tax burden (compared to the United States) due to General tax system.

Налоговый потенциал Республики Крым

The entry of the Republic of Crimea into the Russian Federation created problems of the republic’s adaptation to the budget and tax legislation of Russia. Most of these problems have already been resolved, but a number of questions still remain. The application of the Russian tax legislation in Crimea initially led to a fall in the regional budget’s own revenues, but gradually the situation began to improve. In order to develop business in the territory of the Republic of Crimea, it was necessary to apply a flexible tax mechanism, including the creation of a free economic zone and varying tax rates for special tax regimes, and this task is being consistently solved. The main objective of the present time is to reduce the shadow economy through tax administration as well as to introduce a tax on professional income and a mechanism for registering real estate. The proposed abolition of the single imputed income tax, making up a substantial income for local authorities, cannot be offset by a patent tax form or other sources. It is necessary to change the budget legislation on the distribution of tax revenues between local budgets according to both basic taxes and special tax regimes—even in the face of increased personal income tax revenues as a result of growth in the tax base and the inclusion of separate divisions in regional taxpayers.