Artists sentenced by Tax Authorities

Norwegian officials have sentenced the painter Odd Nerdrum to two years in prison on charges that he evaded paying the full amount of taxes on $2.6 million that he made selling artwork between 1998 and 2002.

Tax Gap visualisatiion

This may be the most difficult diagram I've ever done. The information and data is swathed in obfuscation, economic jargon and subtle sleight-of-hand definitions and sub-definitions that mask the meaning from interested readers. It was a real struggle. I hope it and the data make sense.

Back to Basics- Personal Income Tax

Figure 1 Basic Income: Flat Tax

Figure 2 The Government's Budget Constraint

Figure 3 Optimal Tax Rate

Figure 4 Maximum Tax Rate

Figure 5 Marginal Tax Rate on Top Income

For the Student- Personal Income Taxation: From Theory to Policy;

The main change in the approach to taxation came from the later integration of public finance into the general area of welfare economics, which was itself a major concomitant of the successful introduction of a utility-maximising approach to exchange in the 1870s. However, the most systematic early developments came from Cohen-Stuart in 1889 (Cohen-Stuart 1958) and Edgeworth (1897) in investigating the broad implications for progressivity of the minimisation of total disutility from taxation—ignoring any possible benefits. With the criterion of minimising total sacrifice, progression arises from decreasing marginal utility, but with equal absolute sacrifice, it depends on the precise behaviour of the marginal utility of income. Even here, there was no explicit independent role for redistribution: the maximand was strictly considered to be total utility.

This movement reached its ultimate conclusion in the 'optimal tax' literature, beginning virtually a century after the initial introduction of a utility analysis into economics. The mathematical analyses of Edgeworth were extended by allowing, in particular, for labour supply incentive effects of taxes and transfers, and including a range of specifications of the objectives of taxation, thus introducing an explicit redistributive role.8 In this final development, most of the important criteria suggested by Smith and others were ignored. The relevant branch of welfare economics into which optimal tax theory falls is the theory of the 'second best', in view of the fact that the government is unable to tax individuals' endowments of ability and instead taxes their incomes. Sometimes, stress is placed on asymmetric information aspects, in that the government cannot observe ability levels

Assorted

Causes of the Oil Shock of 2007-08

Japan’s recovery

Government deficits through fiscal policy and inter-generational justice

Mongolian government takes action to support small businesses (or Inspections Gone Wild)

To regulate finance, try the market

Consumer confidence indices: further economic deterioration

Why the GST is a good idea

Taylor rule and liquidity trap

The GPT That Dares Not Speak Its Name

Fed Confronts Financial Crisis by Expanding Its Role as Lender of Last Resort

The Man to save Pakistan Tax System?

Teaching Taxation in Developing Countries

What are good books for teaching taxation in developing countries?

The Theory and Practice of Tax Reform in Developing Countries
Etisham Ahmad, Nicholas Stern
Tax Policy Handbook
Economics of Taxation (syllabus)

Guess the author of this book

The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen

Related;

This is confirmed by a brief search on Amazon, which yielded the following books - most published within the last ten years. “The End of Poverty” by Jeff Sachs, “The End of History” by Francis Fukuyama, “The End of Faith” by Sam Harris, “The End of Food” and “The End of Oil”, both by Paul Roberts, “The End of Lawyers” by Richard Susskind, “The End of Fashion” by Teri Agins, “The End of Days” by Zacahria Sitkin, “The End of Human Rights” by Costas Douzinkas, two books called “The End of Globalisation” - one by Harold James and one by Alan Rugman, “The End of Nature” by Bill McKibben, “The End of Work” by Jeremy Rifkin, “The End of Medicine” by Andy Kessler, “The End of Memory” by Miroslav Wolff, “The End of Science” by John Horgan and “The End of the Poem” by Paul Muldoon.

These books share more than just a cliched title. They are also all clearly implausible. Look through that list and ask yourself is it really possible that any of the above will actually come to an end?

In Brief- Tax Reform Trends

Tax Policy: Recent Developments
A brief look at global tax reform trends

Summary: This note, part of the Fiscal Reform and Economic Governance Project's Best Practice Notes series, examines worldwide trends in tax reform over the past several decades, focusing on developments and challenges central to the tax policy debates in developing and transition countries. It addresses global and regional trends, including the systematic reduction and elimination of international trade taxes, the spread of the value-added tax, the move toward simple, low-rate corporate and personal income taxes, and a reduction--in some (but far from all) countries--in the “tax wedge” on labor.

See more Best Practice notes from USAID

Assorted Conferences

Taxation, state building and capacity development in Africa” -28-29 August in Pretoria

At the end of two days those present, reached some laudable resolutions including:

* that the domestic tax base is a key mechanism for developing countries to escape aid or single resource dependency.
* that effective tax systems can reinforce government legitimacy through promoting accountability of governments to tax-paying citizens, effective state administration & good public financial management.

Latvian 4th International Public Management Summer Institute

Religion of measurement – how and why do you measure progress? Bill Dorotinsky, World Bank
Linking performance management to policy planning – setting objectives. Ronnie Downes, Department of Finance, Ireland

Podcast of the Day- Dueling Tax Plans

Dueling Tax Plans: What Would McCain and Obama Do?
A conversation with the candidates' top economic advisers

Featured Speakers

* Austin Goolsbee, senior economic policy adviser, Obama ’08
* Douglas Holtz-Eakin, senior economic policy adviser, John McCain 2008

Analysis of the Candidates’ Tax Plans

* Len Burman, director, Tax Policy Center, and senior fellow, Urban Institute

Related;
On Dividend Taxes, It’s a Post-Partisan Race -Mankiw

BARACK OBAMA is often described as a post-partisan politician who transcends traditional ideological divides. Is it true? At least when it comes to one small but important aspect of tax policy — the treatment of corporate dividends — the answer appears to be yes. Without much fanfare or public notice, Senator Obama has embraced a central element of the Republican agenda.

Obama Economic Advisor Goes on Offense Against McCain

Report from the RNC Tax Policy Forum with Austan Goolsbee and John Taylor;

In Joel Slemrod's presentation, he asked how a non-economist could evaluate the potential effects of the candidates' proposals on the economy. (By the way, Joel's book Taxing Ourselves, A Citizen's Guide to the Debate over Taxes is by far the best popular guide to the topic.) He said that an imperfect but plausible approach is just to compare the records of the Clinton and Bush presidencies.

If McCain’s Tax Cuts Will Create Jobs, Why Haven’t Bush’s?

Will Trickle Down Policies Help "All Americans"?

Stephen Kinsella on the Irish Budget

My main point was the government needs to strike the correct balance of decreased public spending, increased taxes, wage moderation, and borrowing. Ireland has a pretty low national debt, so borrowing is the soft option. However, it doesn’t address the medium term problems of a high wage, high price economy.

Explainers of the Day

The Greek menace

Tax Foundation and Competitive Environments: more bunk!

Washington Post Misleads Readers to Push for Lower Corporate Tax Rates

Employment watch

When does fiscal issues become a tipping point in elections?

Holtz-Eakin Says Obama Will Lead to Larger Deficit

R. Glenn Hubbard Sees `Massive' Deficit Growth Under Obama

John McCain Has a Tax Plan To Create Jobs
By MARTIN FELDSTEIN and JOHN B. TAYLOR

McCain site on the economy

Maconomics

Related;
Obama's acceptance speech;

As I listened to the speech by Barack Obama accepting the nomination of the Democratic Party for the U.S. presidency, I felt I was listening to a very gifted orator. I also thought I heard a cash register go ca-ching every time he finished a sentence...

As the list of things Obama promised to do grew ever longer, I found myself increasingly wondering, What is the underlying understanding of how the economy works that would motivate such a list? All these steps require a commitment of resources. If we are to have more of these things, we must be planning to divert the resources to pay for them from somewhere else. Evidently there is a notion of some kind of existing inefficiency or misallocation of resources-- money is currently being spent on things it shouldn't be, and should instead be devoted to objectives on the above list. But how is the bill for all these nice things supposed to be paid?

Reading for the Day

Corporate tax policy, budget deficits and the capital stock in a neoclassical model of investment

Obama advisers talk

Goolsbee, Furman Say McCain's Plan Would Expand Deficit


Related;
More on Obamanomics

Jordan: Technical Assistance, 2000–2008

Fiscal

• May 2000 Framework for managing nontreasury accounts

• September 2000 Oil pricing mechanism
• January–June 2002 Pension reform
• January–September 2002 GST reform
• November 2002 Macrofiscal capacity and treasury single account
• February, October 2003 Revenue administration reform
• June, August, December 2003 Peripatetic advisor on single treasury account
• February, June, October 2004 Peripatetic advisor on revenue administration reform
• February, May 2004 Public expenditure management
• August 2004–June 2005 Resident expert in macrofiscal management
• February 2005 Distributional effects of replacing oil subsidies
• February–March 2005 Revenue administration reform
• April 2005 Fiscal ROSC
• February, May 2006 Public financial management
• April–August 2006 Expert visits on revenue administration reform
• October–November 2006 Revenue administration inspection visit
• March–April, July, December 2007Revenue administration reform (METAC)

Monetary and Financial

• January–February, April–May 2001, International reserve management
• April–May 2008, Debt management strategy

Statistical

• July 2000 National accounts statistics
• January–February 2002 Report on the Observation of Standards and Codes—Data module

• December 2003 Follow-up on Report on the Observation of Standards and Codes—Data module
• Oct. 2003–Jan. 2004, Mar–May 2004 Balance of payments statistics
• April–May 2004 Government finance statistics
• December 2006 National accounts statistics
• October–November 2006 SDDS Assessment mission
• July 2007 Follow-up on SDDS/Government Finance Statistics

Other

• March 2008 Financial programming workshop

Source: Jordan: 2008 Article IV Consultation - Staff Report

For Discussion: IMF has done a relatively better job at capacity development than other IFIs, especially the peripatetic model has been quiet effective. Discuss.

Related; IMF to Enhance Impact of Its Technical Assistance

In the IMF's FY2008 alone, close to 200 "person-years" (or about 52,000 working days) of assistance was delivered to IMF member countries

How would an MTEF be like in Middle Ages

Even restricting the application of the principle of opportunity cost to just one facet, such as castle building in the High Middle Ages, involves many difficulties. Taxation, budgeting, and spending in the Middle Ages can only be described as haphazard, or at least they appear so because of the paucity of records.

It would be very interesting to know the sums spent by medieval monarchs on fortifications in their countries. It is known that cities gave enormous sums for building walls and ramparts, and for digging moats. Unfortunately there is a total lack of information about costs for this period.

This quotation, from a standard work on the military history of the age, reveals some frustration of the study of the period. Fortunately, progress has been made, and even as debate regarding the exact numbers will continue, a number of deductions can be made about the labor and capital cost necessary to construct medieval fortifications. About the overall cost there is little dispute. Medieval rulers had the greatest difficulties in paying for their wars, and powerful monarchs had no less trouble despite initially starting with more. “All were driven to desperate expedients to make ends meet.” Worse, possession of more power and territory gave one more to defend. Castles and troops were both necessary, and this led to every conceivable way being devised to raise money. “Since the time of Cicero and Tacitus to the fifteenth century and beyond, authors often asserted that the tranquility of nations was impossible without armies, armies without soldiers’ wages, or wages without tribute.”

The result of the search for funds has been described as “less a system of taxation than a system of plunder,” and this was no metaphor. In England, for example, goods were sometimes seized from merchants and only released after “tax” was paid. And it was never enough. Despite the most vigorous tax collections England had ever known, Edward I (r. 1272–1307) constantly outran his financial resources. Between 1294 and 1297 wars with Scotland, France, and Wales required such heavy war levies that laity and clergy alike rebelled, leading to a major constitutional crisis. This was not the result of mere royal greed; bad policy is another matter. In Edward’s last years, the Wardrobe, as the department that paid the army’s bills was called, rarely had a thousand pounds at any given moment, while earlier in his reign it had been able to send its paymasters sums as large as £5,000 at once.

Credit was no permanent solution. Since the twelfth century credit had been steadily expanding across Europe. Tempted, Edward I took two steps: he borrowed, usually from Italian bankers, and he did not repay them, at least not completely. His first bankers, the Riccardi, failed to collect some £18,924; the Frescobaldi firm was shorted some £25,000. It did little good. At his death, Edward I left a debt of some £200,000, almost four times the entire annual royal revenue. Justly, some of this could be attributed to the policies of a king who not only made war constantly but pursued policies almost guaranteed to lead to further wars. Unsurprisingly, periods of peace led to dramatic improvements in the condition of the treasury. But there was more to the matter than the behavior of an overly, and overtly, aggressive king. Far more interesting about Edward I is that, despite running repeated campaigns in France, Wales, and Scotland, he nevertheless chose to plow fortunes into the building of castles

Source: Castles, Battles, and Bombs: How Economics Explains Military History
Jurgen Brauer and Hubert van Tuyll

Recommended;
INTEGRATING DEFENSE INTO PUBLIC EXPENDITURE WORK