PROGRESSIVE PERSONAL INCOME TAX: ADVANTAGES AND DISADVANTAGES

Article Retracted.

The paper studies the introduction of progressive personal income tax rates in Russia. The objective set in the scope of the research is to determine the most significant socio-economic implications of the introduction. The research focuses on the analysis of the impact the progressive tax rates might have on personal incomes assuming the targeted approach widely recognized abroad as a tool for the study of government programs in the area of financial protection of the most vulnerable groups. The paper conciders constitutional principles of financial discrimination and methods to ensure it. The fiscal and socio-economic benefits of the financial discrimination measures inherent in the income tax are compared with similar measures for social transfers and property taxes; also discussed are advantages and disadvantages of the targeted approach used in progressive taxation. A model of budget balance through reallocation of the opportunity cost used for progressive taxation is described. The costs of incentives being the main argument in favor of maintaining the flat income tax scale and the effects they might lead to are analyzed.The principal advantages and disadvantages in terms of private and public interests are highlighted to be taken into account when choosing measures of state regulation of the economy such as the introduction of progressive personal income taxation, increasing the role of property taxes and the introduction of or increase in the size of social transfers. The introduction of progressive taxation is analyzed from the viewpoint of the constitutional principles of the state economic regulation; it is concluded that such introduction is feasible. In part of the state regulation of the economy, arguments are provided both in favor of and against the introduction of progressive taxation. The findings of the research may be helpful to law decision makers in assessing the feasibility of the progressive personal income tax in Russia.

1. Resheniia Konstitutsionnogo Suda Rossiiskoi Federatsii [Decisions of the Constitutional Court of the Russian Federation]. URL: http:// www.ksrf.ru/ru/Decision/ Pages/default.aspx (access as of 02.04.2013). (In Russ.)

2. The Austrian personal income tax and corporate income tax. URL: http:// english.bmf. gv.at/Publications/Income_tax_v4 (1).pdf (access as of 02.04.2013).

3. Raspredelenie obshchego ob”ema denezhnykh dokhodov i kharakteristiki differentsiatsii denezhnykh dokhodov naseleniia [Distribution of the total cash income and characteristics of the cash income differentiation among the population]. URL: http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/population/level/# (access as of 26.09.2014). (In Russ.)

4. Obespechenie adresnosti transfertov v razvivaiushchikhsia stranakh: analiz opyta i nekotorye vyvody [Targeted transfers in developing countries: analysis of the experience and some conclusions]. URL: http://siteresources.worldbank.org/SAFETYNETSANDTRANSFERS/ Resources/281945–1138140795625/Targeting_ Rus.pdf (access as of 26.09.2014). (In Russ.)

5. Raspredelenie naseleniia po vozrastnym gruppam [Classification of the population by age groups]. URL: http://www.gks.ru/wps/ wcm/connect/rosstat_main/rosstat/ru/statistics/population/demography/# (access as of 24.10.2014). (In Russ.)

6. Izmenenie chislennosti po variantam prognoza [Population quantity changes according to forecast options]. URL: http://www.gks.ru/ wps/ wcm/connect/rosstat_main/rosstat/ru/ statistics/population/demography/# (access as of 27.10.2014). (In Russ.)

7. Ispolnenie dokhodov [Execution of revenues]. URL: http://info.minfin.ru/kons_doh_isp.php (access as of 02.04.2013). (In Russ.)

8. Lapov D.E. Unifikatsiia kak napravlenie modernizatsii diskretsionnoi fiskal’noi politiki gosudarstva: monografiia / pod red. N.F. Gazizullina, V.V. Lozhko [The unification approach to modernization of the discretionary fiscal policy of the state: monograph / Ed. N.F. Gazizullina, V.V. Lozhko]. Saint Petersburg. ROST Publishers, 2011, pp. 120–127, 636. (In Russ.)

9. Zakonoproekt № 415961–5 «O vnesenii izmenenii v stat’iu 224 chasti vtoroi Nalogovogo kodeksa RF (o vvedenii progressivnoi shkaly stavok naloga na dokhody fizicheskikh lits)» [Draft Law No. 415961–5 «On Amendments to Article 224, Part Two of the RF Tax Code (on introduction of progressive personal income tax rates)”]. URL: http://asozd2. duma.gov.ru/main.nsf/%28SpravkaNew%29? OpenAgent&RN=415961–5& 02 (access as of 25.11.2012). (In Russ.)

10. Zakonoproekt № 576534–5 «O vnesenii izmenenii v glavu 23 chasti vtoroi Nalogovogo kodeksa RF (v chasti vvedeniia progressivnoi shkaly naloga na dokhody fizicheskikh lits i uvelichenie razmerov standartnykh, sotsial’nykh i imushchestvennykh vychetov)» [Draft Law No. 576534–5 «On Amendments to Chapter 23, Part Two of the RF Tax Code (regarding the introduction of progressive personal income tax rates and the increase in the size of standard, social and property deductions)”]. URL: http://asozd2.duma. gov.ru/main.nsf/%28SpravkaNew%29? OpenAgent&RN=576534–5&02 (access as of 25.11.2012). (In Russ.)

11. Rossiiskii nalogovyi kur’er [The Russian Tax Courier]. URL: http://www.rnk.ru/ news/37797-postupleniya-ot-naloga-na-dohody-fizlits-za-9-mesyatsev-2001-goda-vozrosli-po-sravneniyu (access as of 26.09.2014). (In Russ.)

12. Kartoteka arbitrazhnykh del. Elektronnoe pravosudie [Card index of arbitration cases. E-justice]. URL: http://ras.arbitr.ru/ (access as of 26.09.2014). (In Russ.)

13. Ishchite prizrakov [Looking for ghosts]. URL: http://www.rg.ru/2014/10/14/rabota.html (access as of 24.10.2014). (In Russ.)

14. Derbeneva V.V. Prakticheskaia realizatsiia novogo naloga na nedvizhimost’: algoritm novatsii [Practical implementation of the new real estate tax: the innovation algorithm]. Vestnik UrFU. Seriia «Ekonomika i upravlenie» — The UrFU (Ural Federal University) Bulletin. «Economics and Management» Series, 2013, no. 3, pp. 151–158, 167. (In Russ.)

15. Lapov D.E. Problema vybora optimal’nogo ob”ekta nalogooblozheniia [The problem of choosing an optimal object of taxation]. Volgogradskoe nauchnoe izdatel’stvo. — Volgograd Scientific Press, Volgograd: 2011, pp. 95–96, 176. (In Russ.)

16. Derbeneva V.V. Obosnovanie optimal’nykh nalogovykh reshenii v sfere nedvizhimosti [Justification of optimal tax solutions in the real estate sector]. Vestnik UrFU. Seriia: «Ekonomika i upravlenie» — The UrFU Bulletin. «Economics and Management» Series, 2012, no. 1, pp. 107–114, 153. (In Russ.)