Chapter 9 Taxation: Income and Wealth

Classification of Taxes on Income and Wealth:
1. the personal and corporate income taxes;
2. the transfer taxes, namely, the estate and inheritance taxes;
3. the real property tax on realty used for personal purposes;
4. the individual residence tax, both basic and additional;
5. the tax on motor vehicle used for personal purposes;
6. the immigration tax;
7. firearms license fee;
8. hunting permits; and
9. social security contributions, both of private and public employees.

Arguments for Taxes on Income and Wealth Taxation is a fiscal tool of government for the achievement of economic, sometimes non-economic, goals.
GOALS:
1. maximum freedom for choice, consistent with the welfare of others;
2. optimum standards of living, in terms of available resources and techniques;
3. an optimum rate of economic growth; and
4. distribution of income in conformity with the standards of equity currently accepted by society.

Characteristics of Tax System
Economic effects. – The tax structure must be established in such a way as to avoid interference with the attainment of the optimum allocation and use of resources and where possible, to assist in the attainment of the optimum.
Equity. – The distribution of the tax burden must conform to the pattern of income distribution regarded as the optimum by the consensus in contemporary society.

Minimum costs of collection and compliance, consistent with effective enforcement. – This rule requires that taxes be established in such a manner as to minimize the real costs of collection, in terms of resources required to collect the taxes and to comply with the tax laws, as well as in terms of the direct inconvenience caused the taxpayers in the payment of those taxes.

Two General Approaches
Benefit Approach – is interpreted to acquire equal treatment of persons who