Tax Rate

(redirected from Marginal effective tax rate)
Also found in: Dictionary, Thesaurus, Legal, Financial, Acronyms.
Related to Marginal effective tax rate: Average tax rate

Tax Rate

 

the amount of tax levied per unit of taxation, for example, per hectare of land or per ruble of income.

The tax rate expresses the norm of tax collection and is set by legislation. Tax rates may be fixed, proportional, progressive, and regressive. Fixed tax rates are established as an absolute sum per unit or object taxed, regardless of the amount of income, and are ordinarily used in taxing small plots of land. In the USSR, fixed rates are applied in collecting the agricultural tax on the private plots of kolkhoz members. Proportional tax rates are set at a definite percentage of income, regardless of the total amount. In the USSR, for example, proportional rates are used to levy an income tax on the income earned by consumer cooperative societies.

Progressive tax rates increase as the amount of taxable income increases. A distinction is made between simple and complex, or sliding, progressions. Under a simple progression, the rate increases with the amount of taxable income and is applied to the total amount of income or total value of the object being taxed. Under a complex progression, the rate increases only for the portion valued in excess of a predetermined preceding step. Progressive rates are used primarily in the levying of income taxes on the populace of the USSR and foreign countries.

Regressive tax rates diminish as the amount of income increases. Regressive taxation is clearly seen in the mechanism of indirect taxes on consumer goods that exists in every capitalist country. Under capitalism, special tax rates are frequently used to give certain advantages to large companies and corporations.

G. L. MAR’IAKHIN

References in periodicals archive ?
Indeed, the OECD took such an approach when examining marginal effective tax rates for various example family types in a range of countries in 2001 (7).
However, the provision of generous social benefits (to address equity concerns) and their rapid tapering-off (to address budgetary concerns) keep the marginal effective tax rates at a high level, thus weakening work incentives.
Figure 3 compares the behavior of the marginal effective tax rate with that of the average tax rate, computed as taxes paid as a percent of pre-tax earnings.
Marginal effective tax rates on capital by country Per cent 2007 2005 2006 average average Manufacturing Services Average United States 36.
One development was the growing consensus among tax economists and policy analysts that capital taxation reform should focus on equalizing marginal effective tax rates among different types of assets so as to end severe tax nonneutrality significantly affecting efficiency of capital allocation through distortion by uneven investment incentives.
Lengthen working hours To increase working time, the government should: * Consider further reducing the taper rate for withdrawing childcare subsidies as household income rises, subject to findings of the evaluation in 2006 of the child care financing system; Increase subsidies for out-of-school hours care, as is being considered; * Require schools to make arrangements so that children are not sent home when teachers are absent; * Go further in reducing high marginal effective tax rates associated with the withdrawal of household income related benefits by withdrawing individual rent subsidies more slowly; and * Encourage the social partners to reduce overtime wage premiums.
This limits the options for reducing marginal effective tax rates, although the introduction in 1999 of the Working Tax Credit that tapers off less steeply than the Family Credit it replaced has removed the worst peaks of marginal effective tax rates (HM Treasury, 2005; Dilnot and McCrae, 2000).
Hsewhere, tax incentives are so generous, as in the case of Atlantic forestry and manufacturing, that the marginal effective tax rate on capital is "negative," implying that businesses will over-invest in capital so long as they can write off unused deductions from profits earned on other investments.
Finally, other capital intensive sectors (such as resources) tend to have more favorable capital cost allowances, lowering the marginal effective tax rate on capital.
As shown in the table, Canada has the second highest marginal effective tax rate on capital among 36 countries in 2005.
One way of taking into account these factors and other levies on business, such as capital taxes, in determining the overall "competitiveness" of the business tax regime is to calculate and compare the marginal effective tax rate (METR) on capital in different provinces (or countries).
However, marginal effective tax rates are difficult to observe across the entire economy.