The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Taxation of Income

  • Alan J. Auerbach
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1554

Abstract

Income taxes are the single most important source of revenue for most countries, although there is an active debate about the relative attractiveness of alternatives such as broad-based consumption taxes. In practice, the income tax base deviates from a comprehensive income measure in several important respects, by excluding non-market activities, limiting refunds for losses, and including capital gains on realization rather than on accrual. Each deviation introduces additional distortions of taxpayer behaviour. Defining the family unit for purposes of income taxation remains a complex issue, as does the optimal degree of tax progressivity.

Keywords

Capital gains taxation Consumption taxation Depreciation Direct taxation Double taxation Expenditure taxation Haig–Simons measure of income Indexation of the income tax Indirect taxation Inflation Interpersonal utility comparisons Marginal tax rates Negative taxation Progressive and regressive taxation Realized vs unrealized capital gains Tax distortions Taxation of income 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Alan J. Auerbach
    • 1
  1. 1.