Tax Rate

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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.


References in periodicals archive ?
Hourly Wage Rate and Taxable Labor Income Responsiveness to Changes in Marginal Tax Rates.
In addition, the reduction of marginal tax rates on individual income would increase incentives to work and result in 5.
However, describing cliff effects using solely marginal tax rates can paint an incomplete picture of the effect.
Similarly, several studies have found a positive impact of marginal tax rates on entrepreneurship.
Myles (2000) and Prescott (2004) argue that the absence of a strong correlation between labor income taxation and income may be due to the improper measures of taxation and especially the marginal tax rates, given that the majority of countries worldwide have been using progressive tax systems.
They found that although marginal tax rates do not affect GDP growth rates, a 1 percent tax cut would raise the level of per capita GDP by between 0.
8 percent]) compared with the difference between the highest and lowest marginal tax rates, 25 percent (35 percent - 10 percent).
A decrease in the marginal tax rate that raised the after-tax share of income by 1 percent raised reported taxable income by 0.
Low inflation and low marginal tax rates set up conditions that mitigate the potentially large tax burden imposed on firms when the LIFO reserve is liquidated and when future income differences favor continued use of LIFO.
This generates a similar top marginal tax rate to that in the second scenario, 52.
When income taxes are not comprehensive, taxpayers on high marginal rates will have incentives to hold tax-preferred assets, with those on low marginal tax rates holding heavily taxed assets.
The following sections describe the measurement of the average and marginal tax rates in more detail, and discuss the statistics based on these rates for 2007.