State Tax Policy Research Articles

Удосконалення фінансової основи місцевого самоврядування в контексті децентралізації, реалізації бюджетної та податкової політики держави

Розвиток сучасного муніципального права України відбувається на якісно новому рівні. Концепції децентралізації, деконцентрації державної влади, зокрема децентралізації фінансів, є предметом посиленої уваги під час політико-правових дискусій і практичного втілення результатів доктринальних та інших теоретичних досліджень. Мета цієї публікації – запропонувати шляхи розв’язання проблем правового регулювання процесу фінансової децентралізації в Україні на підставі результатів аналізу законодавства, а також подальшого вдосконалення фінансової основи територіальних громад і системи місцевого самоврядування в Україні. Методологія. Для досягнення окресленої мети застосовано загальнонаукові методи, насамперед – діалектичний метод наукового пізнання реальних явищ, а також акцентовано на його використанні під час дослідження діяльності органів місцевого самоврядування в Україні. Визначальними є також спеціальні методи дослідження: метод системного аналізу; системно-структурний – для висвітлення змісту досліджуваних категорій і правових явищ, формування понятійно-категоріального апарату; порівняльно-правовий, формально-логічний, статистичний, прогностичний тощо. Наукова новизна статті полягає в удосконаленні теоретичного розуміння змісту фінансової децентралізації на рівні місцевого самоврядування. Реалізація права на місцеве самоврядування, захист законних інтересів членів територіальних громад, які покладено на органи й посадових осіб місцевого самоврядування, потребують перегляду пріоритетів і напрямів бюджетної та податкової політики держави в сучасних умовах, здійснення фінансової децентралізації в інтересах громад і місцевих жителів. Висновки. Одним із напрямів сучасної муніципальної реформи в Україні є децентралізація державно-владних повноважень, зокрема її різновид – фінансова децентралізація. На підставі результатів аналізу проблемних питань створення та функціонування територіальних громад як юридичних осіб публічного права визначено перспективи вдосконалення їхнього статусу, фінансових та інших засад організації, діяльності територіальних громад. Вивчення співвідношення централізації та децентралізації державно-владних повноважень, реформи міжбюджетних відносин дали змогу сформулювати пропозиції щодо підвищення рівня ефективності інституційного та нормативного механізмів діяльності системи місцевого самоврядування, продовження фінансової децентралізації з метою забезпечення соціально-економічного розвитку територіальних громад в Україні.

Tasks, methods of implementation and models of the state tax policy of Ukraine

Tasks, methods of implementation and models of the state tax policy of Ukraine

INCOME TAXES IN TAX POLICY FOR INCLUSIVE GROWT: A THEORETICAL DIMENSION

Introduction. Inclusive economic growth in Government’s Action Program is proclaimed as a strategic priority for the development of the Ukrainian economy, which makes it urgent to study the ways to secure it. An important role in ensuring inclusive growth is played by the state tax policy including income taxes due to both the ability of taxes to influence on the distribution of income and wealth in society, and the possibility of using them to stimulate more productive labor, improve skills, and obtain education. Purpose of the article is to identify the ways to reform income taxes in the process of forming and implementing tax policies for inclusive growth. Results. The study showed that developing income tax design that meets the requirements of inclusive growth seems to be quite difficult, since its model, which is considered the least economic efficiency (progressive income tax), is the most fair, while the least fair model (proportional tax) is the most economic efficiency. Therefore, the process of approximating various models of personal income tax to the needs of ensuring inclusive growth involves solving various problems: for a progressive tax – finding ways to increase efficiency (primarily employment incentive tools, which is a key factor for building an inclusive economy), for proportional tax – the tools of increasing equity, for personal and corporate taxes on capital income – a combination of the measures directed to increase both equity and efficiency. The tools proposed by financial science for the fulfillment of these tasks and approaches to their practical application in the EU countries are identified. Conclusions. While financial science offers a wide range of tools that can help create income taxes that meet the goals of inclusive growth, each country should choose those tools that can be effective under its conditions. In the course of such choice the numerous factors influencing effectiveness of tax measures in a particular country should be taken into account.

Deshadowing the Economy as the Vector to Ensure Effective State Tax Policy

The article is devoted to the study of the interconnection of tax policy indicators and the shadow economy in the complex interaction in the context of the country’s competitive tax system. Key indicators of tax policy implementation (total tax and contribution rates, number of taxes, time to administer taxes by economic entities) of Ukraine are compared with the countries of the European Union. The paper uses empirical correlation coefficients to determine the relationship between tax rates, tax revenues, and the level of economy shadowing, both for the Ukrainian economy and internationally. The dual role of the shadow economy in the use of the Laffer concept is substantiated. The key directions of the deshadowing policy of the economy of the country are identified. It will help to balance and increase the efficiency of the implementation of the mechanisms of taxation of economic entities. Keywords: shadowing of the economy; tax policy; tax rate; tax revenues; tax burden; Laffer concept.

Effectiveness of Tax Policy of Ukraine: Evidence and Economy Implications

The article deals with the peculiarities of the formation and implementation of tax policy in the country. The analysis of change of tax receipts to the state and local budgets is carried out. The role of tax payments in the economic development of the country is determined. The efficiency of the state tax policy in Ukraine is analyzed, its advantages and disadvantages are determined. The important role of tax payments in stimulating economic and social development is substantiated. The analysis of the elasticity of change of indicators of economic development of the country from the change of volume of tax receipts to the budget is carried out. The necessity of improving the existing policy of establishing, accrual, payment, and distribution of tax revenues as one of the most promising areas to stimulate economic growth is concluded. Keywords: tax policy, revenues, tax evasion, state budget, elasticity, economic development

ОБРИСИ ЗМІНИ ПАРАДИГМИ ПОДАТКОВОЇ ПОЛІТИКИ УКРАЇНИ

The relevance of the research topic is due to the absence in Ukraine of an institute of tax, which should have a Серія Економіка. Випуск 1(13) 211 philosophy of creation, formation of a new paradigm of tax policy development taking into account the consequences of the current global crisis. The purpose of the study is to clarify the question of what analogous tax policy model with which type to choose for Ukraine to build a tax institute in the context of a further development paradigm. The general philosophical method, deductive method, method of comparative analysis, analogies, generalization have been used to obtain the results of the study. Analogical models of tax policy have been considered in the article: maximum tax policy model (fiscal and fiscal-redistributive type), the result of application is increase of tax burden on economy and population; model of the minimum tax policy (regulatory and fiscally-competitive type), the result of which is a decrease in budget revenues, a reduction in public investment, and a significant reduction in social expenditures; model of a reasonable tax policy (fiscal-regulatory type), the result of application is finding a compromise between the implementation of fiscal, regulatory and distributive (social) functions of taxes, a significant amount of social spending. It has been determined which countries in which economic situations used an analog model. It has been established that events in the world and in Ukraine will force our country to look for a new model of tax policy and to build on it a new tax system. It has been substantiated that Ukraine for the period of overcoming the consequences of the crisis should build the tax system on the basis of an analogous model of maximum taxes with the use of fiscal and redistributive type of tax policy, which will provide a high level of social expenditures and significant public investment in the economy, will provide significant social leveling in society, which in turn will entail high progressive income and property taxes. The practical implications of the findings are that they can be used to set up a tax institute in Ukraine and develop an effective state tax policy. This topic has the prospect of research on improving the taxation mechanism to provide the citizens of the country with the necessary public goods. Key words: tax institute, public goods, tax policy, analog model of tax policy, maximum tax policy model, minimum tax policy model, reasonable tax policy model, type of tax policy.

On the effectiveness of state tax and expenditure policies to encourage entrepreneurship

Purpose The purpose of this paper is to expand the empirical literature on state tax and expenditure policies and entrepreneurial activity in several meaningful ways. Design/methodology/approach The authors update the panel data to include several more recent years and also consider other elements of state policy. Findings The most important takeaway is that even after dealing with some of the known shortcomings of dynamic panel analysis, we are still not able to find economically meaningful impacts of state tax and expenditure policies (generally defined) on entrepreneurial performance. Research limitations/implications Earlier studies that have found statistical significance have generally been limited to extensive-margin impacts on such things as self-employment rates or counts of new or small firms. When the authors examine what policy makers actually care about – things like income and employment among entrepreneurial ventures – the authors do not find much in the way of useful policy impacts. Practical implications To be sure, the authors find entrepreneurial performance to be statistically significantly related to certain tax rates and expenditure amounts, but the magnitudes of our estimated results cast serious doubts on the usefulness of these particular policy levers for generating meaningful improvements in entrepreneurial success. Originality/value The authors’ primary contribution is to improve the empirical consideration of the time series properties of the data. The authors provide a battery of more general and robust analyses to more completely surround the question.

THE STATE AND PROBLEMS OF THE DEVELOPMENT OF TAXATION OF INTELLECTUAL PROPERTY OPERATIONS

The article summarizes from a scientific point of view the state and economic nature of changes in taxation of operations in the innovation intellectual economy with objects of intellectual property rights (IPR) taking into account the processes that are followed in the European Union (EU). The author considers in detail the content and classification of IPRs that are included into intangible assets.Emphasis is placed on conducting the operations with IPRs, linking with the implementation of the relevant state tax policy through the Tax Code of Ukraine, which regulates the relations arising in the field of tax and fees collection. The author systematically considers the dynamics of changes in the tax system of Ukraine in the direction of adjustment (increase or decrease) of the financial result before the taxation (profit or loss), determined in the financial statements of the enterprise on the difference in accordance with national provisions (standards) of accounting or international standards of financialreporting. The article considers the value added tax taxation of operations with IPRs under a license agreement when paying royalties as double taxation. Attention is paid to changing the tax base, taking into account the various constraints on the content and amount of costs that are defined in accounting system, with the disclosure of the generalization of approaches of different countries to the profit taxation of corporations. The author analyzes tax rates of separate taxes, expressed in absolute units, that are characterized by greater volatility, and researches the growth of hryvnia equivalents in hard currencies of tax rates due to the devaluation of hryvnia, which leads to a nominal increase in state budget revenues. Attention is drawn to the fact that there are not fully taken into account the specifics of tax regulators of creation, acquisition and use of IPRs and the transfer of technologies that require the harmonization of financial, tax and accounting legislation in Ukraine with the application of EU common approaches to taxation of profit by amending the legal acts regarding their realization.

Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy

We study the effect of state-level estate taxes on the geographical location of the Forbes 400 richest Americans and its implications for tax policy. We use a change in federal tax law to identify the tax sensitivity of the ultra-wealthy's locational choices. Before 2001, some states had an estate tax and others didn't, but the tax liability for the ultra-wealthy was independent of their domicile state due to a federal credit. In 2001, the credit was phased out and the estate tax liability for the ultra-wealthy suddenly became highly dependent on domicile state. We find the number of Forbes 400 individuals in estate tax states fell by 35% after 2001 compared to non-estate tax states. We also find that billionaire's sensitivity to the estate tax increases significantly with age. Overall, billionaires' geographical location appears to be highly sensitive to state estate taxes. We then estimate the effect of billionaire deaths on state tax revenues. We find a sharp increase in tax revenues in the three years after a Forbes billionaire death, totaling $165 million for the average billionaire. In the last part of the paper, we study the implications of our findings for state tax policy. We estimate the revenue costs and benefits for each state of having an estate tax. The benefit is the one-time tax revenue gain when a wealthy resident dies, while the cost is the foregone income tax revenues over the remaining lifetime of those who relocate. Surprisingly, despite the high estimated tax mobility, we find that the benefit exceeds the cost for the vast majority of states.

Estimating the Impact of State Taxation Policies on the Cost of Wind Development in the West

Wind development offers local economic growth opportunities, and for this reason, reducing the tax burden on wind development may be a policy advocated by communities wishing to attract such investment. Alternatively, increased local public costs, and the potential externalities caused by wind development may create a reason to raise taxes on wind. Increased taxation on wind presents a potential policy tradeoff as efforts to raise taxes and revenues from wind can reduce a state’s ability to attract wind development. Local tax environments can affect which regions successfully attract wind investment due to their effect on developer’s costs. Estimates of the potential tax elasticity of wind development are undeveloped in the academic and policy literatures, thus policy changes with respect to taxation often occur without any estimate of the potential impact on development. Absent such tax elasticity estimates, comparative estimates of regional wind costs and how they may be affected by state tax policy would be useful to policy-makers, but such estimates are also limited. To our knowledge, the only effort to compare state wind costs across western states and how they vary when state tax policies are included was conducted by a private firm in 2010 (see E3 (2010)), and that study is now well out of date. The study presented here develops such state wind cost estimates by describing the financial structure of a typical large utility-scale wind development. Consideration of the capital structure of a wind development is crucial to understand how different taxation and other incentive policies affect wind development, and to develop taxation strategies that minimize wind development and tax-policy tradeoffs.

Distributional Impacts of State and Local Tax Policy in a Heterogeneous-agent Model

This article presents a dynamic heterogeneous-agent life-cycle model with housing demand to evaluate the economic implications of reforming US state and local personal tax structures. Because of the extensive reliance of state and local governments on income, sales, and property tax revenue, those three taxes are explicitly modeled to generate a baseline and varied to evaluate alternative policy proposals. The results of the model show that the sales tax burden falls evenly across the distribution of income earners, while the property tax burden falls more heavily on the highest income earners. By design, the model’s income tax is progressive, so the tax burden shares rise with income. Results also show that the property tax generally improves utilitarian social welfare relative to income and sales taxation, but the magnitude of these gains depends on the availability of a state and local tax deduction on federal income taxes.

Financial Immigration Federalism

Federal preemption doctrine constrains state power over undocumented immigrants. As courts and commentators focus on disputes over policing and removal, led by sanctuary cities and states, they overlook what I call “financial immigration federalism.” This Article uncovers emerging forms of financial immigration federalism while also reconsidering familiar forms. Federal tax legislation explicitly eliminated certain tax credits to undocumented immigrants, but states continue to explore expanding them—including by incentivizing employment that is considered illegal under federal law. State entities have supported long-term, owner-occupancy mortgages to undocumented immigrants, which the traditional government-sponsored enterprises do not purchase. And undocumented immigrants, including those with legal work authorization, have long been excluded from federal lending markets for higher education, a vacuum that states have filled with divergent policies. In each of these markets, states and localities act to both expand and limit financial options to undocumented immigrants, a form of immigration federalism. To analyze tensions between preemption and state sovereignty at the heart of financial immigration federalism, this Article uncovers the legal questions arising from states extending financial benefits to undocumented immigrants, particularly when conditioned on employment and long-term residency. I argue that competing deference regimes, including to state and local tax policy, should play a role in resolving the constitutionality of subnational financial sanctuary (or purgatory). I also consider the case for incorporating subnational intent, as opposed to just congressional or federal intent, in analyzing financial immigration federalism.

System of tax revenues forecasting in Ukraine: theory and reality

The article is devoted to the problem of improving the system of forecasting tax revenues in Ukraine. Forecasting tax revenues in the budget system is a key tool for implementing the state tax policy. This process represents a systematic work on the calculation of tax revenues for the future. The purpose of tax forecasts is to identify, for a certain time period, tax revenues, taking into account their economically justified level.The author proved that this sphere of public administration and economic-analytical practice requires improvement, taking into account progressive developments, which proved their effectiveness in the western countries. The analysis of the forecasting errors of the main budget-generating taxes in Ukraine is carried out by comparing the forecast indicator at the end of the period (taking into account changes that were made during the budget year) with actual values.The article describes the method of forecasting tax revenues. In the given model the level of VAT is influenced by GDP growth, the national currency rate and the growth of VAT in the previous period. The individuals' income depends on the growth of GDP, the dynamics of the national currency rate and the growth of VAT, on the dynamics of excise tax. As for the corporate income tax, it is influenced by the growth of the national currency, the growth of VAT, while this indicator is related to GDP.The method of forecasting tax revenues proposed provides more accurate forecast data than the officially approved Method for predicting budget revenues, which gives grounds for considering it as a promising forecasting tool that deserves further study and improvement.

Transformation of tax regulation in the post-bifurcation period

The object of the research is to study theoretical and practical questions of institutional transformation of tax regulation after the adoption of the Tax Code of Ukraine. The aim of the research is to show institutional transformations of tax regulation and to determine changes in its fiscal role in formation of the national budget after the adoption of the Tax Code of Ukraine. Research methods. Methodological foundation of the article is built on the terms of the synergetic theory used for analysing the transformation of the tax regulation. The terms and categories of the synergetic paradigm were used in the scientific research. Research results: we showed institutional transformations of the tax regulation and determined the changes in its fiscal role in formation of the income of the summary, state and local budgets after the adoption of the Tax Code of Ukraine. It was proven that the adoption of this legislative act resulted in a significant transformation of the institutional foundations of the tax regulation which helped to normalize the relations between fiscal authorities and taxpayers. The conducted study showed that a significant reduction of taxes and charges in the tax system of Ukraine at the end of 2010 as well as in the period from 2011 to 2017 did not result in the loss of its fiscal potential and, on the contrary, improved the quality of the budget provision with tax income. Branch of results application: the results of the conducted research can be used in taxation theory and practice, management of tax processes and development of strategies of the state tax policy on the state and local levels. Conclusion. It was proven that the adoption of the Tax Code of Ukraine resulted in transformation of the national tax regulation system at formation of income of the summary, state and local budgets. The following events were observed in the period from 2011 to 2017 in comparison with the period from 2004 to 2010: increase of the fiscal role of the tax regulation in formation of income of the budget system of Ukraine; increase of the fiscal role of the tax regulation in formation of income of the national budget on the national level; stability of the fiscal role of the tax regulation in formation of income of the national budget on the local level.

Теоретичні аспекти податкового прогнозування та планування як невід’ємних механізмів державної податкової політики

Теоретичні аспекти податкового прогнозування та планування як невід’ємних механізмів державної податкової політики

Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy

We study the effect of state-level estate taxes on the geographical location of the Forbes 400 richest Americans and its implications for tax policy. We use a change in federal tax law to identify the tax sensitivity of the ultra-wealthy?s locational choices. Before 2001, some states had an estate tax and others didn?t, but the tax liability for the ultra-wealthy was independent of their domicile state due to a federal credit. In 2001, the credit was phased out and the estate tax liability for the ultra-wealthy suddenly became highly dependent on domicile state. We find the number of Forbes 400 individuals in estate tax states fell by 35% after 2001 compared to non-estate tax states. We also find that billionaires? sensitivity to the estate tax increases significantly with age. Overall, billionaires? geographical location appears to be highly sensitive to state estate taxes. We then estimate the effect of billionaire deaths on state tax revenues. We find a sharp increase in tax revenues in the three years after a Forbes billionaire death, totaling $165 million for the average billionaire. In the last part of the paper, we study the implications of our findings for state tax policy. We estimate the revenue costs and benefits for each state of having an estate tax. The benefit is the one-time tax revenue gain when a wealthy resident dies, while the cost is the foregone income tax revenues over the remaining lifetime of those who relocate. Surprisingly, despite the high estimated tax mobility, we find that the benefit exceeds the cost for the vast majority of states.

Evaluation of tax regulation effectiveness of shadow economy in Ukraine

Current trends in the socio-economic development of the economy indicate the need to find new mechanisms for increasing revenues to the state budget, also by minimizing illegal financial flows. The paper investigates the essence and features of the tax regulation of illegal withdrawal of funds. The main directions of the influence of the state tax policy on the behavior of economic entities are identified. Based on the analysis of trends in the volume of tax burden, shadowing the economy and GDP, the conclusion about the inverse relationship between the economy shadowing level and the amount of taxes and fees is made. By comparing the current tax system of Ukraine with other countries of the world, its main advantages and disadvantages in the context of de-shadowing the economy are identified. The main trends of changes in the level of corruption in the country are considered as one of the determining factors in building the effective system of state regulation and control over the completeness and timeliness of meeting tax obligations to the budget. It is concluded that it would be expedient to revise the existing tax system in the country both in terms of simplifying the procedure for calculating and paying taxes, and reducing the tax burden on taxpayers.

КОМПЛАЕНС И СЕРВИСНОСТЬ СИСТЕМЫ НАЛОГОВОГО АДМИНИСТРИРОВАНИЯ РОССИЙСКОЙ ФЕДЕРАЦИИ

The tax system is a powerful economic regulator of income distribution. It is necessary to observe a balance between the state interests related to the provision of tax revenues to the budget and the interests of economic entities, guaranteeing them indirect financial support in the form of tax preferences aimed at developing business and production. The development of the economy in recent years has stated its high dependence on geopolitical factors, which significantly influenced the need to revise the structure and specifics of the income distribution to the budget system. Gradually, the focus shifted towards formation of income through non-oil sources. Some contribution to the provision of revenues to the budget system has recently been relegated to the tax administration system. Understanding conceptual directions of studying the tax administration confirms the debatable nature of this issue and allows to consider tax administration an important lever for managing the tax process based on the introduction and application of modern advanced technologies, aimed at achieving the objectives and goals of state tax policy and ensuring the collection of taxes in the Russian budget system. The modern tax administration system is characterized by high efficiency which is expressed in expanding the interaction with taxpayers This contributes to establishing partnerships between the participants in the tax process. The execution of the tax administration mechanism is carried out through implementation of technological and organizational-management measures. Despite the results achieved in tax administration, there are directions for its further development: expanding the criteria for participants in tax monitoring, reducing the period of cameral tax verification of the declaration, and increasing the tax culture of taxpayers.

Implementing the Principles of the Social State in Tax Law within the Context of the Digital Economy

The article deals with the specific features of implementing the social state principles in the tax law of Russia and other countries, first of all, the European Union, within the context of the digital economy development. In particular, the article focuses on the manifestations of the principles of social justice and social and economic equality in forming and implementing the state tax and legal policy, including during the periods of economic crises. The following methods were used in the research: the statistical and comparative legal methods, as well as the method of legal modeling implemented in applying the general theoretical model of using legal means in tax and legal regulation. We made the conclusion that tax, and legal stimuli were the most important social- and innovation-oriented legal means in implementing the state tax and legal policy within the context of the digital economy. Besides, developing the stimulating function of taxation will encourage further implementation of citizens’ social and economic rights and innovative activity in the age of digitalization.

A Legal Analysis of State Tax Policy for Online Sales: The Recipe from Direct Marketing

ABSTRACT The growth of e-commerce has changed the way people shop. The changing business environment is a strain on state governments due to their inability to collect sales and use tax on most internet-based transactions. While the U.S. Supreme Court, for the first time in almost 30 years, is reviewing a state's ability to collect sales and use tax from out-of-state sellers in South Dakota v. Wayfair, Inc., a potential solution to increase sales and use tax collection may already exist. In 2016, the Tenth Circuit Court of Appeals upheld a Colorado notification law that could provide a blueprint for states to capture tax revenue from online companies and out-of-state retailers. In this paper, we review the constitutional complexities of the taxation of online sales. We also analyze state requirements for informational reporting of sales and use tax and recommend policy to increase potential sales and use tax collection.