Understanding Tax Burden and Structure: OECD Classification

Tax burden/ratio and tax structure

The OECD (Organisation for Economic Co-operation and Development) Classification of taxes

1000 Taxes on income, profits and capital gains

1100 Taxes on income profits and capital gains of individuals

1200 Corporate taxes on income, profits and capital gains

2000 Social security contributions

2100 Employees

2200 Employers

2300 Self-employed or non-employed

3000 Taxes on payroll and workforce

4000 Taxes on property

4100 Recurrent taxes on immovable property

4200 Recurrent taxes on net wealth

4300 Estate, inheritance and gift taxes

4400 Taxes on financial and capital transactions

4500 Other non-recurrent taxes on property

4600 Other recurrent taxes on property

5000 Taxes on goods and services

6000 Other taxes

Tax base of direct taxation: income or consumption

S-H-S concept – basis of all contemporary tax systems of personal (and corporate) income taxation.

Schanz-Haig-Simons income/concept – the broadest income concept:

Schanz: wealth accumulation in specific time period, including the value of services that we get from the others = consumption + saving

Haig: „The money value of the net accretion to one's economic power between two points of time,“ a formulation that was intended to include the taxpayer's consumption

Simons: “the algebraic sum of (1) the market value of rights exercised in consumption and (2) the change in the value of the store of property rights between the beginning and the end of the period in question“

S-H-S income – theoretic ideal – „comprehensive income“ as ability to pay indicator

From the point of view of using the ability to pay (economic power): sum of current (real) consumption and saving

-From the point of view of formation: sum of all possible forms of accruals (incomes in the broader sense): all money incomes (wages, salaries, interests, dividends..)

„Market income“ – money income concept

Theoretical ideal of comprehensive (sveobuhvatan) income is in practice reduced to the „market income concept“. = taxation of only cash-basis market transactions.

CIT

Corporate (company) income tax. Additional tax on income from (equity) capital

èEconomic double taxation of dividends (and capital gains)

PIT rates - personal income tax

H-R flat-tax (Hall – Rabuska flat tax)

Interest-adjusted income tax (consumption-based model)

= labour/employment income (wages and salaries)

-Entails social contribution of employees

-Does not entail social contributions and employers

PIT rate=CIT rate.

Personal exemption: tax allowance (augmented for family members)

Flat tax -> Porez na dohodak koji ima samo jednu poreznu stopu bez obzira na veličinu dohotka, pri čemu je moguće odrediti dio dohotka koji se ne oporezuje.