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Abstract

The author favours threefold reform of Income tax law: (1) making the extent of tax liability independent of the legal form in which business is being conducted, (2) exempting from Income tax that part of Income which the taxpayer needs for subsistence, including the subsistence of those who depend upon the taxpayer for their maintenance, and (3) abolishing exemptions, deductions and other tax privileges which tend to create different tax rates for different types of income. A tax system so contructed would lend itself to the major reform which the author proposes: the creation of a dual income tax regime which would impose a progressive form of tax upon income which is appropriated to consumption, and a generally much lower and proportional tax upon income which is appropriated to the formation of capital. In this second and final part of his article, the author considers the practical problems associated with such a tax regime and makes proposals for their solution.

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