IDEAS home Printed from https://ideas.repec.org/p/ifs/ifsewp/07-21.html
   My bibliography  Save this paper

Integrating Income Tax and National Insurance: an interim report

Author

Listed:
  • Stuart Adam

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Glen Loutzenhiser

    (Institute for Fiscal Studies)

Abstract

Income Tax and National Insurance are now sufficiently similar that merging them appears to be a plausible option, yet still sufficiently different that integration raises significant difficulties. This paper surveys the potential benefits of integration - increased transparency and reduced administrative and compliance costs - and the potential obstacles, assessing the extent to which each of the differences between Income Tax and NICs - in particular the contributory principle, the levying of an employer charge and the differences in tax base - constitute serious barriers to integration. The paper concludes that few of the difficulties look individually prohibitive, but that trying too hard to avoid significant reform of the current policy framework could produce a merged tax so complicated as to nullify much or all of the benefits of integration.

Suggested Citation

  • Stuart Adam & Glen Loutzenhiser, 2007. "Integrating Income Tax and National Insurance: an interim report," IFS Working Papers W07/21, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:07/21
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk/wps/wp2107.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. William Vickrey, 1939. "Averaging of Income for Income-Tax Purposes," Journal of Political Economy, University of Chicago Press, vol. 47(3), pages 379-379.
    2. Hills, John, 2003. "Inclusion or insurance? National insurance and the future of the contributory principle," LSE Research Online Documents on Economics 5563, London School of Economics and Political Science, LSE Library.
    3. Paul Johnson & Gary Stears, 1996. "Should the basic state pension be a contributory benefit?," Fiscal Studies, Institute for Fiscal Studies, vol. 17(1), pages 105-112, February.
    4. Alan J. Auerbach, 2006. "The Future of Capital Income Taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 27(4), pages 399-420, December.
    5. Elizabeth Symons & Ian Walker, 1986. "The reform of personal taxation: a brief analysis," Fiscal Studies, Institute for Fiscal Studies, vol. 7(2), pages 38-47, May.
    6. Andrew Dilnot & Steven Webb, 1989. "Reforming National Insurance contributions: a progress report," Fiscal Studies, Institute for Fiscal Studies, vol. 10(2), pages 38-47, May.
    7. John Hills, 2003. "Inclusion or Insurance? National Insurance and the future of the contributory principle," CASE Papers 068, Centre for Analysis of Social Exclusion, LSE.
    8. Robin Boadway & David Wildasin, 1994. "Taxation and savings: a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 15(3), pages 19-63, August.
    9. Evan Davis & Andrew Dilnot, 1985. "The restructuring of National Insurance contributions in the 1985 budget," Fiscal Studies, Institute for Fiscal Studies, vol. 6(2), pages 51-60, May.
    10. Judith Freedman & Emma Chamberlain, 1997. "Horizontal equity and the taxation of employed and self-employed workers," Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 87-118, February.
    11. Andrew Dilnot & Steven Webb, 1988. "Reforming National Insurance contributions," Fiscal Studies, Institute for Fiscal Studies, vol. 9(4), pages 1-24, August.
    12. David Skinner & Mark Robson, 1992. "National Insurance contributions: anomalies and reforms," Fiscal Studies, Institute for Fiscal Studies, vol. 13(3), pages 112-125, August.
    13. John Hills, 2003. "Inclusion or Insurance? National Insurance and the future of the contributory principle," CASE Papers case68, Centre for Analysis of Social Exclusion, LSE.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ben Groom & David Maddison Pr., 2019. "New Estimates of the Elasticity of Marginal Utility for the UK," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(4), pages 1155-1182, April.
    2. Stuart Adam & Barra Roantree & David Phillips, 2017. "The Incidence of Social Security Contributions in the United Kingdom: Evidence from Discontinuities at Contribution Ceilings," De Economist, Springer, vol. 165(2), pages 181-203, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tania Burchardt, 2003. "Being and becoming: Social exclusion and the onset of disability," CASE Reports casereport21, Centre for Analysis of Social Exclusion, LSE.
    2. Judith Freedman & Emma Chamberlain, 1997. "Horizontal equity and the taxation of employed and self-employed workers," Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 87-118, February.
    3. Alan J. Auerbach, 2006. "The Future of Capital Income Taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 27(4), pages 399-420, December.
    4. N. Gregory Mankiw & Matthew Weinzierl & Danny Yagan, 2009. "Optimal Taxation in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 147-174, Fall.
    5. Marco Sahm, 2009. "Imitating Accrual Taxation On A Realization Basis," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 734-761, September.
    6. Richard Arnott, 1998. "William Vickrey: Contributions to Public Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 93-113, February.
    7. Francesco Menoncin & Paolo M. Panteghini, 2012. "Ex-Post Equivalence under Capital Gains Taxation," Economics Bulletin, AccessEcon, vol. 32(2), pages 1671-1679.
    8. Jorge Martinez-Vazquez & Violeta Vulovic & Yongzheng Liu, 2011. "Direct versus Indirect Taxation: Trends, Theory, and Economic Significance," Chapters, in: Emilio Albi & Jorge Martinez-Vazquez (ed.), The Elgar Guide to Tax Systems, chapter 2, Edward Elgar Publishing.
    9. Mark Huggett (Georgetown University) and Juan Carlos Parra (Georgetown University), 2005. "Quantifying the Inefficiency of the US Social Insurance System," Working Papers gueconwpa~05-05-16, Georgetown University, Department of Economics.
    10. Gern, Klaus-Jürgen, 1999. "Auswirkungen verschiedener Varianten einer negativen Einkommensteuer in Deutschland: eine Simulationsstudie," Open Access Publications from Kiel Institute for the World Economy 1055, Kiel Institute for the World Economy (IfW Kiel).
    11. Vito Tanzi & Howell H. Zee, 2000. "Taxation and the household saving rate: evidence from OECD countries," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 53(212), pages 31-43.
    12. Knuutinen Reijo, 2018. "The Nordic model: 25 years of drawing the line between earned and capital income in Finland," Nordic Tax Journal, Sciendo, vol. 2018(1), pages 64-80, January.
    13. Giampaolo Arachi & Massimo D'Antoni, 2022. "Taxation of capital gains upon accrual: is it really more efficient than realisation?," Fiscal Studies, John Wiley & Sons, vol. 43(1), pages 39-61, March.
    14. Andreas Haufler, 2007. "Sollen multinationale Unternehmen weniger Steuern bezahlen?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 76(2), pages 8-20.
    15. Stuart Adam & Helen Miller, 2019. "Principles and practice of taxing small business," IFS Working Papers W19/31, Institute for Fiscal Studies.
    16. Homburg, Stefan, 2010. "Allgemeine Steuerlehre: Kapitel 1. Grundbegriffe der Steuerlehre," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 92547.
    17. Philippe Agulnik, 1998. "The proposed state second pension," Fiscal Studies, Institute for Fiscal Studies, vol. 20(4), pages 409-421, November.
    18. Stefan Steinerberger & Aleh Tsyvinski, 2020. "On Vickrey's Income Averaging," Papers 2004.06289, arXiv.org.
    19. Concepción Román & Emilio Congregado & José Millán, 2011. "Dependent self-employment as a way to evade employment protection legislation," Small Business Economics, Springer, vol. 37(3), pages 363-392, October.
    20. Haoming Liu & Jie Zhang, 2008. "Donations in a recursive dynamic model," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 564-582, May.

    More about this item

    Keywords

    Taxation; social insurance; administration;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:07/21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emma Hyman (email available below). General contact details of provider: https://edirc.repec.org/data/ifsssuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.