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==The development of modern tax systems==
==The tax burden==
Modern tax systems had their origins in the 18th century in the United States<ref>[http://www.treasury.gov/education/fact-sheets/taxes/ustax.shtml ''History of the US Tax System'', US Department of the Treasury Fact Sheet, 2009]</ref> and in Britain<ref>[http://www.hmrc.gov.uk/history/ ''A Brief History of Income Tax'' H M Revenue and Customs, 2009]</ref>, and have since evolved piecemeal until they have become so complex that they are fully understood only by highly-trained specialists.
(According to the OECD definition of tax revenues  % of GDP)
Tax revenues in the developed countries now  amount, typically, to 30 to 40 per cent of GDP, compared with 10 to 15 per cent at the beginning of the 20th century. The following paragraphs indicate some of the variations that have typically  been adopted. A comprehensive classification of taxes is available from the OECD<ref>[http://www.oecdwash.org/PUBS/ELECTRONIC/SAMPLES/revenue_methodology2004.pdf ''The OECD Classification of Taxes and Interpretative Guide'', OECD, 2009]</ref>
:::{|class = "wikitable"
!
!align="center"|&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Italy&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp;&nbsp; France&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp; Germany &nbsp;&nbsp;
!align="center"| United States
!align="center"| United Kingdom
!align="center"|&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OECD&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
|-
|1985
|align="center"|27.5
|align="center"|33.6
|align="center"|42.8
|align="center"|36.1
|align="center"|25.6
|align="center"|37.6
|align="center"|32.7
|-
|2007
|align="center"|27.9<sup>*</sup>
|align="center"|43.3
|align="center"|43.6
|align="center"|36.2
|align="center"|28.3
|align="center"|36.6
|align="center"|39.8<sup>*</sup>
|-
|2011
|align="center"|27.6<sup>+</sup>
|align="center"|42.9
|align="center"|44.2
|align="center"|37.1
|align="center"|25.1
|align="center"|35.5
|align="center"|33.6<sup>+</sup>
|}


==Components of taxation==
::::::<sup>*</sup> 2006 ; <sup>+</sup> 2010


===Personal income tax===
(Source OECD revenue statistics (2008)[http://www.oecd.org/document/58/0,3343,en_2649_34533_39498298_1_1_1_37427,00.html])
Personal income tax accounts for about 25 per cent of the average tax receipts of the OECD countries. Taxable income is defined in a variety of ways, with many different allowances, exemptions and deductions. Tax rates are generally progressive, usually starting after  a tax-free range for the lowest incomes, and followed by a sequence of higher rates as successive "thresholds" are exceeded, to reach maximum (and marginal) rates that are mostly between 40 per cent and 60 per cent <ref name=OECD>[http://www.oecd.org/document/60/0,3343,en_2649_34533_1942460_1_1_1_37427,00.html#pir OECD Tax Database, 2009]</ref>. Income from investments and income from employment are sometimes treated differently and there is sometimes special treatment for the elderly.


===Corporate income tax===
==The [[tax wedge]]  ==
Corporate income tax accounts for about 11 per cent of the average tax receipts of the OECD countries and tax rates are mainly between 15 per cent and 35 percent <ref name=OECD/>. As for personal taxation, many different ways of defining taxable income have been adopted<ref>[http://www.ifs.org.uk/docs/meade.pdf, see ''The Structure and Reform of Direct Taxation'', (the Meade Report), chapter 12, page 227]</ref>,  often with allowances for depreciation or research and development and with  "tax breaks" for selected commercial activities. In principle there are also the options of "source-based", "residence-based" or "destination-based" systems (ie related to the location of the parent company, residence of the investor or the location of the final sale).
(Taxation as a percentage  of total labour costs, 2008)
:::{|class = "wikitable"
!align="center"|&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Italy&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp;&nbsp; France&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp; Germany &nbsp;&nbsp;
!align="center"| United States
!align="center"| United Kingdom
|-
|align="center"|29.5
|align="center"|46.5
|align="center"|49.3
|align="center"|52
|align="center"|30.1
|align="center"|32.8
|}


===Taxes on consumption===
(Source: OECD Taxing Wages 2007/2008 [http://www.oecd.org/document/6/0,3343,en_2649_34533_42714758_1_1_1_1,00.html#table_01]
Taxes on consumption account for about 25 per cent of the average tax receipts of the OECD countries


==The changing composition of taxation==
(OECD averages, % of total tax receipts)
:::{|class = "wikitable"
!
!&nbsp;&nbsp;1965&nbsp;&nbsp;
!&nbsp;&nbsp;1985&nbsp;&nbsp;
!&nbsp;&nbsp;2006&nbsp;&nbsp;
|-
!Personal income tax
|align="center"|30
|align="center"|30
|align="center"|25
|-
!Corporation income tax
|align="center"|9
|align="center"|8
|align="center"|11
|-
!Employees' social security contributions
|align="center"|6
|align="center"|7
|align="center"|9
|-
!Employers' social security contributions
|align="center"|10
|align="center"|13
|align="center"|15
|-
!Payroll tax
|align="center"|1
|align="center"|1
|align="center"|1
|-
!General consumption tax
|align="center"|14
|align="center"|16
|align="center"|19
|-
!Specific consumption taxes
|align="center"|24
|align="center"|16
|align="center"|11
|}
Source:OECD (2008) Revenue Statistics[http://www.oecd.org/document/58/0,3343,en_2649_34533_39498298_1_1_1_37427,00.html]<br>
See also the OECD's tax database[http://www.oecd.org/ctp/taxdatabase]


===Social security contributions===
==High-earners' marginal tax rates==
Social security contributions account for about 24 per cent of the average tax receipts of the OECD countries
(marginal rates for employees earning 250% of average earnings - percent)


:::{|class = "wikitable"
!
!align="center"|&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Italy&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp;&nbsp; France&nbsp;&nbsp;&nbsp;
!align="center"|&nbsp;&nbsp; Sweden &nbsp;&nbsp;
!align="center"| United States
!align="center"| United Kingdom
|-
!1981/2
|align="center"|13.5
|align="center"|22.5
|align="center"|44.0
|align="center"|27.6
|align="center"|12.5
|-
!2005/6
|align="center"|16.0
|align="center"|15.3
|align="center"|25.0
|align="center"|13.0
|align="center"|18.0
|}


===Taxes on wealth and property===
(Source: OECD ''Taxing Wages 2007/2008.2008 edition ''[http://www.oecd.org/document/6/0,3343,en_2649_34533_42714758_1_1_1_1,00.html])
 
===Environmental taxation===
 
==References==
 
<references/>

Latest revision as of 09:47, 9 December 2012

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https://en.citizendium.org/wiki/index.php?title=Taxation/Addendum&printable=yes
This addendum is a continuation of the article Taxation.

The tax burden

(According to the OECD definition of tax revenues  % of GDP)

     Japan            Italy           France       Germany    United States United Kingdom       OECD      
1985 27.5 33.6 42.8 36.1 25.6 37.6 32.7
2007 27.9* 43.3 43.6 36.2 28.3 36.6 39.8*
2011 27.6+ 42.9 44.2 37.1 25.1 35.5 33.6+
* 2006 ; + 2010

(Source OECD revenue statistics (2008)[1])

The tax wedge

(Taxation as a percentage of total labour costs, 2008)

     Japan            Italy           France       Germany    United States United Kingdom
29.5 46.5 49.3 52 30.1 32.8

(Source: OECD Taxing Wages 2007/2008 [2]

The changing composition of taxation

(OECD averages, % of total tax receipts)

  1965     1985     2006  
Personal income tax 30 30 25
Corporation income tax 9 8 11
Employees' social security contributions 6 7 9
Employers' social security contributions 10 13 15
Payroll tax 1 1 1
General consumption tax 14 16 19
Specific consumption taxes 24 16 11

Source:OECD (2008) Revenue Statistics[3]
See also the OECD's tax database[4]

High-earners' marginal tax rates

(marginal rates for employees earning 250% of average earnings - percent)

      Italy           France       Sweden    United States United Kingdom
1981/2 13.5 22.5 44.0 27.6 12.5
2005/6 16.0 15.3 25.0 13.0 18.0

(Source: OECD Taxing Wages 2007/2008.2008 edition [5])

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