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Tax Theory and Tax Practice: The Problems of Defining, Measuring and Assessing Tax Bases

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  • Antonio Pedone

Abstract

The wide gap between tax theory and tax practice may be traced back, among other things, to the focus in tax theory on the level and optimal structure of tax rates, assuming that tax bases are consistently defined, precisely measurable and readily and uniformly assessable. This approach overlooks the variances between tax design, tax law, tax impact, tax incidence and tax perception. The effects of taxes on efficiency and equity depend not just on the tax rate schedule adopted but also on differences in tax treatments resulting from the definition, measurement and assessment of tax bases. The Italian experience in the field of income taxation shows the extent to which the definition, measurement and assessment of tax bases matter. Many problems associated with defining, measuring and assessing tax bases, which the personal nature and high progressivity of income tax had contributed to highlighting and accentuating, remain still unresolved and require further research of a better understanding of the rationale, causes and effects of many differentiated tax treatments.

Suggested Citation

  • Antonio Pedone, 2009. "Tax Theory and Tax Practice: The Problems of Defining, Measuring and Assessing Tax Bases," Working Papers in Public Economics 119, University of Rome La Sapienza, Department of Economics and Law.
    • Handle: RePEc:sap:wpaper:wp119
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    References listed on IDEAS

    as
    1. Slemrod,Joel (ed.), 1999. "Tax Policy in the Real World," Cambridge Books, Cambridge University Press, number 9780521641371, October.
    2. Slemrod,Joel (ed.), 1999. "Tax Policy in the Real World," Cambridge Books, Cambridge University Press, number 9780521646444, October.
    3. James M. Buchanan & Richard A. Musgrave, 1999. "Public Finance and Public Choice: Two Contrasting Visions of the State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024624, April.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Rosella Levaggi & Francesco Menoncin, 2015. "Dynamic Tax Evasion with Audits based on Conspicuous Consumption," Working papers 33, Società Italiana di Economia Pubblica.
    2. Bernardi, Luigi, 2009. "Le tasse in Europa dagli anni novanta [Taxation in Europe since the Years 1990s]," MPRA Paper 23441, University Library of Munich, Germany.
    3. Rosella Levaggi & Francesco Menoncin, 2016. "Dynamic tax evasion with audits based on visible consumption," Journal of Economics, Springer, vol. 119(2), pages 131-146, October.
    4. Antonio Pedone, 2014. "Origins, Design, Implementation and Shortcomings of Cesare Cosciani?s Tax Reform Proposals," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2014(3), pages 25-38.

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    More about this item

    Keywords

    tax treatment; tax design; personal income tax; tax assessment.;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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