The state tax system is an economic lever through which the country's budget is formed. In the conditions of instability of market relations, various taxation models are able to regulate negative phenomena and timely cover the budget deficit. Due to the high relevance of tax reforms are a constant subject of debate among lawmakers. The progressive taxation system is again on the agenda as the most acceptable in modern economic conditions.
Application of progression in tax calculation
The main principles of a progressive system are implemented through a special tax collection mechanism. Depending on the accrual method, they can be divided into several types: simple, linear and multi-stage.
A simple progressive tax system has a rather high tax rate. The model also provides for the presence of a tax-free amount of income that is excluded from the tax base.
The linear method of calculating payments is based on a gradual increase in the interest rate in accordance with the growth of income, which is calculated as a coefficient. Such a model brings visible results to the budget, but its implementation requires a long implementation.
The multistage progressive tax system is by far the most effective, since its principle is based on the differentiation of profitability. Within a certain limit, its own tax rate applies. Moreover, when moving to the next level, only the part that did not participate in the previous category is taxed.
All of the above methods have the right to exist in certain periods of the country's economic development. Depending on what goals the state pursues, one or another system is being finalized at the legislative level and introduced for a practical assessment of effectiveness.
The essence of a proportional, progressive and regressive tax system
In order to conduct a comparative analysis of the effectiveness of the main taxation systems, it is necessary first of all to understand the working mechanisms of such methods.
Proportional taxation applies in our country to many types of tax payments. The essence of the method is to equalize all social layers of taxpayers by establishing the same rate for all.
A progressive tax system can be characterized as follows: large income - large tax. Such a system illustrates quite well the social inequality of taxpayers and redistributes the tax burden from the poor to the rich.
The use of a regressive scale at first glance may not seem entirely rational, but in practice such a system has established itself as the most preferred. Reducing the tax rate depending on income growth encourages citizens and entrepreneurs to legalize income. In this connection, budget revenues are increasing.
Tax systems: proportional, progressive, regressive - which is more effective?
Any tax system is an important element of a market economy. The trust of the taxpayer depends on how justly and correctly this or that method is developed.
Taxation systems (progressive, regressive) have a completely different accrual principle. It is easy to guess that the economic result of using such models will also be different. A progressive system is a redistributor of the tax burden, in which the tax burden falls more on the rich. The regression model, on the contrary, transfers the center of gravity to low-income citizens. Such polar characteristics lead to the conclusion that each system is good in due time.
Comparison of flat and progressive method
A proportional and progressive tax system is also difficult to compare, as it is also based on social inequality. In a crisis, economists do not recommend introducing a single income tax rate, explaining this by the fact that a progressive model will most effectively help replenish the budget. At the same time, they fear that rising taxes will again drive the business to the “shadow side”. As a result, a certain part of the profit will be lost, and favorable conditions will be created for the emergence of corruption.
What should the new taxation model look like?
In order to prevent an unfair treatment of citizens and at the same time replenish the state treasury, legislators need to come up with a completely new taxation model. Perhaps the indirect tax should be taken as a basis, which will carry out the receipt of taxes through the costs of citizens.
Such a bill was recently proposed by deputies of the State Duma, but was postponed for more detailed revision, taking into account current economic conditions.
What is interesting about the current model
The current tax system already has some differences from previous models. It clearly defines the rights and responsibilities of federal and territorial administration. Thanks to the introduction of local taxes, various territorial financial problems were resolved.
And yet, the current model is not ideal, as it is too confused and almost closed to external investors. A constant review of tax rates, the amount of certain benefits are not the best facts in a market economy.
