Ukrainian Tax Research Articles

Оцінка податкового розриву по податку на прибуток в контексті збільшення фіскального простору

The article is devoted to the analysis of the corporate income tax gap as one of the indicators that characterizes the tax revenues that a country can accumulate accounting for its economic potential. The author summarizes the main theoretical views on the causes of the tax gap and investigates existing methodological approaches to assess the tax gap on corporate income tax in OECD countries. The article estimates the income tax gap under the OECD Revenue Administration - Gap Analysis Program, which is based on determining potential tax revenues by adjusting the aggregate indicators of the system of national accounts (gross output, mixed income), which, according to the analysis, averaged at 1.4% GDP in the period 2017-2019, which shows a potential for the development of the fiscal space of Ukraine. Upon analysis of the distribution of the tax gap between institutional sectors of the economy, the largest gap in income tax was found in the sector of foreign corporations whose potential tax revenues were estimated as tripled relative to the declared tax revenues accrued in the Consolidated Budget of Ukraine in 2018. The author conducted a comprehensive analysis of the effectiveness of corporate income tax in Ukraine on the basis of tax efforts and budget efficiency ratios, which revealed significant weaknesses in comparison with similar indicators in other countries. The main measures aimed at eliminating tax gaps in OECD countries are summed up and recommendations are made for Ukraine.

Концептуальні підходи до удосконалення оподаткування викидів двоокису вуглецю в Україні

The domestic carbon tax needs to improve tax administration to ensure its fiscal efficiency and reduce transaction costs for tax compliance. Despite the fact that in the Tax Code of Ukraine the calculation of such a tax is based on the actual indicators of CO2 emissions, in practice it is based on the amount of resources consumed and the characteristics of the production process. Accordingly, the difficulties in administering this tax are the complexity of tax audits and the need to involve environmental experts. All this does not allow to adhere to the principle of cost-effectiveness of taxation and highlights the need to find opportunities to simplify the process of tax administration on the basis of world best practices. The purpose of the article is to outline conceptual approaches to improving carbon taxation, which will allow Ukraine to simplify tax administration and together with the EU to effectively combat the effects of climate change in order to increase security and create new opportunities for Ukrainian business under the European Green Deal. The methodological basis of the study was the use of a set of general and special methods: generalizations and scientific abstraction, historical and logical, extrapolations, spatial and graphical and tabular methods of visualization. The application of the SWOT analysis method and the systematization of European practice revealed that the most acceptable for Ukraine is the use of tax on CO2 emissions in the form of an indirect tax on energy consumption. Coefficients of carbon content in fuel, calorific value of fuel and its oxidation factor were used to convert the emission base carbon tax into the fuel base carbon tax. The implementation of these proposals will help increase the efficiency of administration of such a tax, as it will: 1) reduce the number of taxpayers through the introduction of the institution of tax agents while increasing the amount of tax paid by one taxpayer; 2) simplify the procedure for calculating the tax base by taxpayers and employees of tax authorities; 3) increase the fiscal efficiency of the environmental tax on carbon dioxide emissions from stationary sources by 50% in the case of setting the CO2 price at UAH 10 per ton (5-fold when setting the CO2 price at UAH 30 per ton in accordance with the proposals of the bill No 5600) and to attract potential revenues from the transport sector in the amount of 0.06% of GDP. The use of practical proposals and recommendations obtained in the article will increase the effectiveness of Ukraine's tax policy by forming a set of measures which will reduce the energy dependence of the national economy, including through incentives for energy-saving and climate-neutral technologies, reduce the burden on the environment, and will help simplify the administration of environmental taxes while increasing their fiscal efficiency. Research materials can be used in the preparation of draft regulations and policy documents in the field of environmental and excise taxation, which is within the competence of the Ministry of Finance of Ukraine, as well as in the formation of proposals, reservations and recommendations to other regulations on improving environmental and excise taxation initiated both by the authorities of the executive power of Ukraine, and the Verkhovna Rada of Ukraine on improving environmental and excise taxation. The theoretical results are the development of a general theory of fiscal administration for environmental and excise taxation.

Удосконалення механізму справляння ПДФО для розвитку громад в умовах децентралізації

Досліджено роль та місце податку на доходи фізичних осіб у структурі податкових надходжень місцевих бюджетів. Обґрунтовано сутність механізму його справляння. Проаналізовано положення щодо ефективності здійснення податкового контролю за повнотою його надходжень та описано причини необхідності реформування порядку його сплати податковими агентами.

ACCOUNTING OF DEFERRED TAX ASSETS AND LIABILITIES: HISTORICAL EXCURSION AND MODERN REALITIES

The article considers the essence of deferred tax assets and liabilities and their reflection in the system of accounts and registers in the historical context. The periodization of the process of formation and development of the problem of deferred taxes in Ukraine with the use of normative and historical methods of cognition is carried out. The differences between permanent and temporary differences in tax profit (loss) and accounting profit (loss) are described. The approach to accounting for deferred taxes and their place in the reporting of enterprises using an algorithmic process is generalized. A detailed description of the current position of accounting for deferred taxes through the viewpoint of Ukrainian accounting standard 17 "Income Tax". Conclusions are made on the possibility of further research on the elimination of methodological difficulties in the allocation of certain tax differences to temporary or permanent.

Legal regulation of tourist tax: some problems

The search for effective sources of filling local budgets leads to the establishment of various local tax payments. The legislator defined the tourist tax as a local tax, the funds from which are credited to the local budget. Is it possible to recognize a certain payment as a «tourist tax» if there are signs of belonging and direction of funds? The article is devoted to some problems of legal regulation of tourist tax in Ukraine. The work focuses on establishing the legal content and essence of the tourist tax, as well as the rules governing the collection of this tax payment. The views of scholars on the legal content of the tourist tax are considered. Based on the analysis of the provisions of the legislation, the peculiarities and some shortcomings of the legal regulation of the collection of tourist tax are revealed. It was found that the normatively defined definition of «tourist tax» does not allow to reveal the essence and highlight the specific features of this mandatory payment. The tourist tax does not belong to the tax payments that are subject to mandatory establishment by local governments, the decision on this payment depends on the discretion of the local government. The substantiation of the establishment of the tourist tax should correspond to the objective needs of a certain territorial-administrative unit, and the definition of the circle of payers of this tax payment should be in accordance with the constitutional bases of guaranteeing the right of ownership. The article provides a list of current regulations governing the collection of tourist tax. The peculiarities and criteria for determining the preconditions for the obligation to pay the tourist tax are revealed. It is noted the need to define and form a conceptual framework that characterizes the essence of the tourist tax and amendments to the Tax Code of Ukraine, which will reflect the updated model of tourist tax. The results of the study can be used in lawmaking and law enforcement, as well as further research.

Problematical Issues of Functioning of the Environmental Tax in Ukraine

Problematical Issues of Functioning of the Environmental Tax in Ukraine

Personal income taxation in the human capital development incentive

The article substantiates the opportunities for stimulating the human capital development through personal income taxation in Ukraine. The need for constant investments in the human capital for improvement of its quality has been substantiated by conceptual provisions of the human capital theory and empiric researches of its influence on economic growth. The completed analysis of theoretical concepts and practical use of income taxes worldwide allows substantiating the fact that concept of a flat income taxation can be successfully used to promote the human capital development. However, the analysis of income tax systems abroad shows that separate taxation tools for personal income, including tax allowances for education, are more efficient. This is especially typical for developing countries. In estimating investments in the human capital in Ukraine, it is found out that the share of working population with high skills increases against the decreasing actual expenses for higher education. In a meantime, foreign countries demonstrate the other economically correct dependence: the qualification level increases as real expenses to gain it increase. The analysis of real national expenses in Ukraine for one student and in the country in general also demonstrate their decrease. This proves the presence of problems in Ukraine that relate to financing the system of higher education. The methods of economic and mathematical simulation by building and parametrizing a number of functions allowed to substantiate the influence of investments in human education on the increase of the highly skilled labor, which in turn leads to the GDP growth. A scientific and methodical approach has been developed, based on the algorithm that takes into account the influence of the highly skilled labor factor (considering expenses for gaining the qualification) on the GDP level. This approach allows estimating the effectiveness of expenses on tax allowances and expediency of their use to promote investments in higher education in Ukraine. The economic consequences of the human capital development incentive by introducing tax allowances in Ukraine have been estimated. It is established that if the state increases expenses for higher education by granting allowances, the share of working population with high skills increases, thereby causing the GDP to grow by means of increasing employment level. However, it has been found out that the expenses for tax allowances are reimbursed only in the case where investments in fixed assets increase and amount no less than 25 % of the GDP.

Tax on real estate, other than land

The study examines the mechanism of real estate taxation. The current state of their functioning in Ukraine is analysed in detail. Problems of legal and regulatory nature are also investigated. The main features that characterize this tax, both in Ukrainian and Polish legislation, are also described. In addition the feasibility of reforming the tax base in the Ukrainian legislation is analyzed. Analyzed the experience of foreign countries, and held a parallel to the functioning of the tax in Poland, as an example, one of Europe’s economically developed countries. This article focuses on tax on immovable property. The introduction of real estate tax in Ukraine has followed a difficult path. The authors emphasize that development, and global development, is not possible without the socio-economic development of the country. In the authors’ view, development must begin in the cities, namely with the effective formation of local budgets. Because the financial resources of the cities have a direct influence on the solution of social and economic problems. The problem of deficiency of financial resources of cities, is a frequent problem on the territory of Ukraine. Therefore, we consider it necessary to pay attention to the European practice of countries that have a rational approach to the redistribution of income, with the help of certain tax rates, or by applying the benefits provided by the legislation. Statistical data shows that property tax has been introduced in about 130 coun-tries, thereby providing a significant part of budget revenues. The study is written using the descriptive method on the basis of administrative court jurisprudence and tax law literature.

THE CONCEPT OF CORPORATE REFORM INCOME TAXATION IN UKRAINE

Abstract. The article examines the feasibility and relevance of reforming corporate income taxation in Ukraine.
 We have scrutinized scientific researches of domestic and foreign scientists. The low fiscal efficiency of corporate income tax has been investigated and a stable relationship has been detected between the level of tax payment and a set of additional factors, namely the level of corporate management, the form of ownership and public attention.
 The high weight of the payment of income tax in the overall structure of the top-30 enterprises of Ukraine for the payment of taxes was noted. The international experience of corporate income taxation is analyzed and summarized. The necessity of replacing the income tax with another type of corporate income taxation has been substantiated. Systemic problems of the effectiveness of the existing models of corporate income taxation in the world are noted. The negative impact of low-tax on the functioning of tax systems in a lot of countries and the creation of the effect of uneven tax burden is emphasized. Information on the practical experience of introducing a tax on withdrawn capital in the foreign countries has been systematized. The low efficiency of that concept and the inexpediency of using this concept in the modern domestic conditions have been investigated. The possibility of replacing the value added tax has been assessed and the critical dependence of the budget incomes on the tax has been established. Concept of reforming corporate income taxation was developed and substantiated by introducing 1% turnover tax in addition to value added tax and the complete abolition of income tax. The volume of tax receipts for 2010—2019 has been estimated in the case of the introduction of author's concept of corporate taxation of income instead of current taxation system. The positive consequences for Ukrainian economy have been evaluated and systematized. Strong need to form a new tax culture and philosophy of interaction between representatives of tax authorities and business was emphasized.
 Keywords: corporate income taxation, corporate income tax, tax on withdrawn capital, turnover tax.
 JEL Classіfіcatіon H25
 Formulas: 0; fig.: 0; tabl.: 3; bibl.: 19.

WAYS TO IMPROVE PROPERTY TAXATION IN UKRAINE IN THE CONTEXT OF FOREIGN EXPERIENCE

Ways to improve property taxation in Ukraine are considered, taking into account foreign experience and correcting one’s own mistakes. The main practical recommendations and ideas for improving property taxes in Ukraine are highlighted.

BEHAVIORAL ASPECTS OF HARMONIOUS DEVELOPMENT OF THE TAX SYSTEM OF UKRAINE

In the light of the COVID-19 pandemic, more and more attention of Ukrainian scientists is drawn to non-traditional factors stimulating the development and harmonization of the tax system, which should include behavioral aspects. The purpose of the article was to outline the latter in the conditions of functioning of the tax system of Ukraine. The influence of behavioral factors was assessed based on the expected results of their activation. It is noted that ignoring the above factors encourages taxpayers to make irrational decisions and violations of tax legislation, which is expressed in tax evasion or avoidance. However, the same aspects can be potentially effective in harmonizing the current tax system. To outline the current behavioral aspects of the impact on taxation in Ukraine, the existing results of the tax system were studied, the basic factors influencing them were identified and the desired qualitative effects in the future were outlined. I claim that сurrently, the tax system of Ukraine is characterized by the predominance in the structure of revenues of the Consolidated Budget of Ukraine of the share of indirect taxes over direct ones. And although at the end of 2020 this figure, compared to 1992, decreased by 3.4%, the inflated tax burden is felt by all taxpayers. In addition, excessive fiscalization of the economy does not promote investment activities that could improve the country's economic climate. Outlining the range of main factors that can be used to adjust the economic behavior of taxpayers, as well as factors that directly affect the taxpayer's decision, made it possible to form a list of active behavioral aspects relevant in modern conditions for harmonization of Ukraine's tax system. Among them, there is the transfer of part of the financial obligations to perform direct functions of the state to the payers themselves, in particular by directing funds from the excise tax on fuel for road repairs and rehabilitation, strengthening equity trends by increasing taxation of capital and luxury goods, setting progressive rates taxes, granting benefits and preferences to certain categories of payers; adjusting the preferences of taxpayers through the level of taxation. Under general condition that the state modifies the tax targets from fiscal to incentive, the result should be a new model of taxpayers' behavior.

Напрями удосконалення акцизної політики у сфері тютюнових виробів в Україні

The article analyses the ways to improve tobacco excise taxation in Ukraine considering a respective EU Member States experience, consequences of national reforms held in previous years, as well as challenges and potential threats caused by the pandemic. A worsening economic situation and the recent decline in income compounded the existing problems related to tobacco taxation in Ukraine. The increase of excise tax rate on cigarettes by 20% annually till 2025 and an inconsistent decision on more than four times increase of excise tax rates on electronically heated tobacco products (EHTP) pose a risk of boosting illicit trade. The advance payment of excise tax on imported tobacco products, in turn, negatively affects finances of importers due to the working capital diversion. Following that, the priority steps with regard to the excise policy of Ukraine should be aimed at: 1) revision of the existing plan of increasing tax rates on cigarettes by slowing down the growth of tax burden and simultaneous expansion of the plan till 2028; 2) correcting the burdensome reform on excise taxation of EHTP to establish more liberalized tax regime 3) switching to payment of excise tax on imported tobacco products during customs clearance. The mentioned initiatives taking into account a strong need to improve a fiscal situation in Ukraine due to the spread of COVID-19 will reduce a negative impact of increasing excise tax rates and administration procedures on tobacco industry. They will also prevent the growth of illicit trade in tobacco products and thus will contribute to improving the efficiency of tax system and strengthening the confidence of business entities.

Світовий досвід оподаткування сімейного бізнесу та перспективи його впровадження в Україні

Approaches to defining the essence of family businesses in foreign countries are considered and the main requirements for their creation are determined. It is determined that family business in foreign countries is mostly carried out in farming. The world family business is characterized by two features. First of all, the preservation of a huge number of small and medium enterprises created by family members. The second feature is the presence of huge family corporations and holdings with a world name and age history, which are inherited 3-6 times. Approaches to the regulation of family businesses in the Czech Republic, Hungary and Romania are analyzed. Foreign experience proves that family businesses can be created both in the form of commercial enterprises and in the form of a legal entity, which allows companies to choose the rules of their own activities; an automatic registration procedure is applied, which reduces time costs; the law defines the list of persons who may belong to family members; joint and several liability of family members under the terms of the contract is applied, which strengthens the liability of all family members for the results of activities; There is a distribution of profits depending on the amount of contributions of each family member, which creates the interest of all persons in increasing the profits of the enterprise. Draft legislative acts were considered, which provided for the introduction of family businesses taxation or regulation of their economic activities. The advantages and disadvantages of such bills are substantiated. The existing system of taxation of family farms within the single tax is analyzed (group 4). Recommendations on the possible introduction of family business taxation in Ukraine as part of the simplified taxation system are substantiated. The risks of applying family business taxation for the state and family businesses are highlighted.

Податкові пільги як інструмент податкового регулювання в Україні

Abstract. Introduction. In modern economic theory, theoretical discussions constantly arise about the feasibility and effectiveness of tax incentives. Tax incentives, under certain conditions, are an effective tool for supporting national competitiveness and creating a new technological core of any economic system, especially a transformational one. At the same time, the conditions for the effectiveness of the benefits provided are their strict purpose, time constraints and constant comprehensive monitoring. In addition, benefits have a certain psychological effect on business entities and increase the investment activity of enterprises. On the other hand, the ineffective practice of preferential taxation contributes to the formation of significant losses of budgetary resources of the state, which leads to a violation of economic stability, a slowdown in economic development and a decrease in the level of financial security of the state. The above confirms the relevance of the study of the impact of tax incentives on the formation of budget revenues, as well as the search for ways to optimize preferential taxation in Ukraine. Purpose. The purpose of the article is to summarize the theoretical aspects of the use of tax incentives as an instrument of tax regulation and to study the effect of preferential taxation on the formation of budget revenues in Ukraine. Results. The theoretical foundations of the functioning of tax incentives are considered. Approaches to the interpretation of the concept of "tax incentive" are generalized and its economic essence is revealed. The advantages and disadvantages of tax incentives, the rights of taxpayers to use tax incentives have been identified. The types of tax benefits in terms of direct taxes have been investigated and systematized. The analysis of losses of the state and local budgets from the provision of tax incentives has been carried out. The main sectors of the economy have been identified and analyzed, where more tax benefits are directed. Conclusions.It was found that the system of providing tax incentives in Ukraine is ineffective. Therefore, there is no doubt about the need to reduce the volume of tax benefits provided to business entities, mainly on non-transparent principles and lead to large-scale budget losses. Tax breaks are not directed to those industries that really need support, but to those that are lobbied in parliament. Therefore, it is necessary to introduce a clear mechanism for the provision of tax benefits, their monitoring, control of losses and benefits of each benefit. Proposals have been developed to improve the system of granting tax benefits and to strengthen control over their development.

Personal income tax as a tool for implementing state social policy

Personal income tax (PIT) is one of the most important taxes in Ukraine due to its economic, social and political role. With its help, one can regulate the investment process, the level of real incomes and maintain stability in society. However, the potential of this tax in Ukraine is not fully used. The purpose of the study is to identify the main problems of PIT and further directions of its implementation as an instrument of social policy. Laffer’s tax theory, on the dependence of economic efficiency of taxation on lower tax rates and the degree of progressiveness of taxes, was taken as a conceptual line of research. Consideration of world trends in the practice of PIT allowed tracing its evolution and choose the methods of its optimization that are acceptable for Ukraine. The use of comparative and statistical analyses, grouping, structural modeling method, index method and systematization of results allowed formulating the author’s version of the income taxation reform in Ukraine. The introduction of a progressive taxation scale should take into account the quality of tax administration, the availability of tax benefits, deductions and loans, the amount of fines, and public perception of the tax system in addition to quantitative results. The proposed family taxation, based on the differentiation of taxpayers by their marital status, actual solvency through the introduction of family rates and the establishment of progressive rates of personal income tax, will fully implement the principle of social justice in the distribution of income.

Assessment of the international competitiveness of the corporate profit tax in Ukraine

The article is devoted to assessing the international competitiveness of the corporate profit tax system based on the approach of the US Tax Foundation, which develops International Tax Competitiveness Index of the corporate profit tax (ICI) and takes into account the level of profit tax rates, cost recovery, tax incentives and complexity of tax law. According to the analysis of the international ranking of OECD countries, Estonia, Latvia, Lithuania, and Hungary had the highest ICIs in 2019-2020. The main factors that have had a positive effect on their competitiveness are the low top marginal income tax rate, unlimited loss carryback and carryforward, no restrictions on the list of assets subject to depreciation, as well as the use of accelerated depreciation, which allows companies to compensate for a larger share of the initial value of assets, LIFO inventory or at least inventory by the weighted average cost method, no Patent Box; no tax credit for R&D, and low corporate profit tax complexity. The calculation of the ICI for Ukraine, based on the approbation of the methodological approach of the Tax Foundation, found that in 2019-2020 Ukraine with a total score of 55.07 took 24th place out of 35 OECD countries. The author characterizes the main components of Ukrainian corporate profit taxation in terms of their impact on international competitiveness; in addition, ways to increase ICI are substantiated.

Legal Aspects of Identity Transactions Involving Entities with Foreign Elements: ICT Technologies and Issues of the Tax Burden

Legal analysis of transaction authentication with the participation of legal entities with a foreign element (LEFE) is interesting not only in disclosing theoretical and practical issues but also with difficulties and several features regarding foreign law application. The purpose of the article is to find the correct procedure for notarization of transactions on the territory of Ukraine with the participation of LEFE. In the research process, the authors combine theoretical developments and legislative instructions with practical experience of notarization. The research is based on four statements, which are confirmed during the study, contain a detailed description of the nuances to avoid possible errors and also offer to use a list of documents required to certification an undisputed transaction in Ukraine. The result of the article and its novelty is a detailed study of the actions of a notary in the certification of transactions involving LEFE, the presentation of a visual algorithm based on the above statements, namely: before the notary certificate it is necessary to determine whether the subjects of the transaction are LEFE; if a legal entity is established under the legislation of another state, then its civil and legal capacity is determined by the personal law of the state of such legal entity; there are certain restrictions on the activities of LEFE in Ukraine. The authors reviewed the recent changes in the taxation in Ukraine of LEFE, which must be taken into account; proposed the use of ICT technologies in notaries, what can not only simplify the process, help avoid subjective mistakes, but also open up new opportunities to streamline transactions involving entities with foreign elements.

METHODOLOGICAL APPROACHES TO THE ASSESSMENT OF THE TAX POTENTIAL OF THE REGIONS OF UKRAINE

The article considers the essence and main properties of the tax potential of the region. The structure of tax potential, including three main components – realized, unrealized and forecasted ones – is studied. It is proved that the main sources of tax potential formation are potential tax revenues, opportunities of taxpayers, tax base resources and rates. 
 The results of an analysis of tax revenues structure in Consolidated Budget of Ukraine for 2013–2019 have shown that the actual tax revenues, forming the realized component of the tax potential, occupy the largest share among all types of budget revenues. The main budget-forming taxes in Ukraine are personal income tax, value added tax, corporate income tax, and excise tax. 
 The characteristics of the existing methods of assessing the tax potential in the region, their advantages and disadvantages are given. To assess the tax potential of the regions in Ukraine, the method using the index of tax potential based on gross regional product has been applied. The analysis of the tax potential index has allowed to systematize the regions of Ukraine into groups according to the indicator of tax capacity, to objectively assess the real income opportunities of each region in the country and to prove that the factors of influence on increasing tax potential should be the growth of gross regional product and income. It is proved that the assessment of tax potential is an important step in the system of tax planning and forecasting, which is based on information about the level of potential income. Based on the results of the assessment of the tax potential of the regions, it is advisable to develop measures aimed at expanding and improving the structure of the tax base, which may be prospects for further development in this area.

Payroll taxes increase reserves in Ukraine

The authors analyzed the reformation of the payroll taxation mechanism in Ukraine, identified wage differences of the employees at the large, medium-sized and small business entities, figured out the reserves to increase tax revenues and cover the deficit of the Pension Fund of Ukraine by decreasing shadow wages and improving payroll taxation in Ukraine. Significant attention is paid to the salaries of the top managers of large business entities as a possible field of applying progressive taxation of personal income. Based on the analysis of the EU countries experience, the authors suggest imposing the second progressive personal income tax rate of 32% for the monthly income that exceeds 15 minimum wages. As well, the abolishment of the maximum unified social contribution base is recommended. In the paper, the authors prove the importance of reducing the level of the shadow economy in Ukraine by forming a public trust to the government policy and using accumulated tax funds appropriately. It has been proved that by reducing the shadowing of the Ukrainian economy to the EU level, the deficit of the Pension Fund of Ukraine can be covered only partially. This fact determines the necessity for Ukraine to ensure economic growth and increase wages.

The mechanism of personal income taxation and its prospects in Ukraine

The article analyses the current mechanism of personal income taxation in Ukraine, examining the impact of its individual elements on total revenues from personal income tax. The analysis of revenue contributions from personal income taxation to the consolidated state budget and local budgets indicates that the personal income tax remains the most important sources of revenue. In the structure of personal income tax revenues, wages are the main source of taxable income. The author analyses the mechanism of taxation for natural persons (businessmen) and tax receipts flowing to local budgets from incomes from business activity and highlights its shortcomings. In this context, he proposes introducing progressive tax rates, which will make it possible to shift the tax burden from individuals with low incomes to those who earn higher incomes.