inflation can be as progressive as regressive? Penal.Mente
Wednesday, February 16, 2011
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The first decade of the twenty-first century dawned with Argentina to its knees. After these past 11 years, we should be able to stop the ball and think about what we want for the future tax system.
A number of economists who never clichés less important, but there are a number of regulatory issues that make consequences common usually due to inflation, transformation or moderate for the same at least in the aggregate analysis.
In 2000, Argentina still weighted down by the crisis started in 1997 and show its ugly head between 2001 and 2002. By the time the tax burden * (at national taxes) did not reach 18% of GDP. The darling of taxation was (as it is today) VAT, which as a tax that does not provide directly the ability to pay who pays, is considered "regressive" ie has a detrimental impact relatively more strongly to the most vulnerable.
So far the story has always been: to higher prices generated by an inflationary process, the greater the VAT collected (in local currency). In itself, if only we can concentrate on the aspect of taxation, inflation adicionarÃa regressive revenue system.
However, I must clarify that the title of this post is in order to capture also the component "progressive" of inflation (?) As regards taxation. This can be seen in the evolution of the collection of profits from both companies as well as individuals. In the first case due to the impossibility of making "adjustments" accounting for inflation (which would be allowed to reduce accounting profits). In the case of natural persons, such as "updates" of non taxable income and deductions were made with some delay, this led to greater numbers of people begin to pay income tax or moving to a level more (which should be taxed a greater proportion of their income). To dispel doubts that this will continue, Labour Minister's Office and candidate for Chief of Government of Buenos Aires and was responsible for communicating .
Thus, inflation can be incorporated (through regulation or violation thereof) a progressive component to the tax regime, which in my opinion is like one of those parables of style such as when the waiter takes away the dishes from the table to tell you to go.
such, if that is the way to make taxes more progressive, dare I say it will fail: espiralizarse and inflation could give back to the system quickly and in this context hard workers willing to accept that they are anchored and the minimum non-taxable if companies are not allowed to "adjust for inflation" have little incentive to continue investing.
Was inflation (along with growth) the formula for success of the collection and redistribution observed (?)?
And if so, whether this causes accentuation of distortions in the future do not run much risk of that is again the seed for the reinstatement of neoliberalism in Argentina?
Questions, only questions ...
Greetings,
MI
* Pressure tax = Revenue / GDP
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