Richard Herd

Increasing Efficiency and Reducing Complexity in the Tax System in the United States

There are only a few OECD Member countries with a lower tax take than the United States. Nonetheless there are a number of improvements that could help reduce the distortions that taxation creates in the economy and so boost long-run economic performance. The most noticeable gains could come from reforming the taxation of the income from capital. Savings are not always allocated to the area where they have the highest return, as there are large variations in the tax on capital income depending on the sector in which it is invested and the financing instruments that are used. In addition, taxation of capital income favours present over future consumption with a negative impact on savings and capital accumulation. In the past, a number of proposals have been made to reduce the tax burden on saving, by replacing the income tax with a consumption tax. While in many ways this would be the best approach, it is would represent a major change in a system that has evolved gradually ... Vers une fiscalite plus efficiente et moins complexe Il n’y a seulement que quelques pays membres qui ont des recettes fiscales moindres que celles des Etats-Unis. Neanmoins, il y a un certain nombre d’ameliorations qui pourraient aider a reduire les distorsions creees par la fiscalite dans l‘economie et dynamiser ainsi les performances economiques a moyen terme. Les gains les plus sensibles pourraient venir de la reforme de l’imposition du capital. L’epargne n’est pas toujours affectee aux domaines offrant les rendements les plus eleves, de grandes disparites existant selon les secteurs dans lesquels elle est investie et les instruments financiers qui sont utilises. En outre, l’imposition des revenus du capital favorise la consommation presente plutot que la consommation future avec un impact negatif sur l’accumulation de l’epargne et du capital. Dans le passe, un certain nombre de propositions avaient ete faites pour reduire le fardeau de la fiscalite sur l’epargne en remplacant l’imposition sur le revenu par une imposition de la ...

Increasing Simplicity, Neutrality and Sustainability

This paper analyses the possibilities for reforming the Icelandic tax system. It puts the current tax structure in its historic context, showing that there has been a steady movement towards simplification. The personal income tax has a lower than average number of bands and, taxes capital income at an unusually low rate. Such a structure favours saving, especially since consumption taxes are particularly high. Nonetheless, there are a number of additional taxes on capital income that serve to raise the overall tax on assets, notably the tax on net wealth. The paper concludes that, if the current budget surplus persists over the medium-term, priority should be given to further reducing corporate taxes and the net wealth tax. At the same time, a number of discriminatory indirect taxes should be replaced by a uniform tax, and the diesel tax reformed. Consideration should also be given to the gradual introduction of a resource tax or to auctioning fishing quotas to help fund the other ... Le present document analyse les possibilites de reformer le systeme fiscal islandais. Il replace l’actuelle structure fiscale dans son contexte historique et met en evidence l’existence d’une tendance permanente vers la simplification. Le nombre de tranches de l’impot sur le revenu des personnes physiques y est inferieur a la moyenne et le taux d’imposition sur le revenu du capital est exceptionnellement faible. Une telle structure favorise l’epargne, d’autant plus que les impots sur la consommation sont particulierement eleves. Neanmoins, il existe un certain nombre d’impots additionnels sur le revenu du capital qui contribuent a elever l’imposition globale sur les avoirs, notamment l’impot sur l’actif net. Le document conclut que, si l’excedent fiscal devait se maintenir dans le moyen terme, de nouvelles reductions de l’impot sur les entreprises et sur l’actif net devraient devenir prioritaires. Simultanement, plusieurs impots indirects discriminatoires devraient etre remplaces ...

Eliminating the U.S. Federal Budget Deficit by 1993

This paper uses the OECDs economic model, INTERLINK, to examine the consequences of eliminating the U.S. federal government deficit. Such action could lead to either lower real interest rates, lower inflation rates or a smaller current account deficit, depending on the stance of monetary policy. The elimination of the U.S. Federal deficit over the medium term could significantly lower the U.S. inflation rate and improve the current account deficit, if nominal interest rates were held constant in the face of falling inflation rates. In the absence of a reduction in the fiscal deficit, a significant increase in interest rates would be necessary to achieve the same reduction in the inflation rate. If, however, policy tightening is not necessary to contain inflation, a reduction in the fiscal deficit might be accompanied by a fall in nominal and real interest rates. In this case, a reduction in the fiscal deficit would not necessarily result in an improvement in the current account ...