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Shows how the Federalists responded to the Antifederalist objections to a stronger national government in the “fiscal‐military” sphere, thereby creating an understanding of the kind of state that was proper to American conditions. In the debate over ratification of the US Constitution there was little discussion about the exact way in which the Federalists intended to organize the revenue administration, but nevertheless, it is the argument of this chapter that with the important exception of the assumption of the state debts, the general outline of Hamiltonian public finance was in place in 1787, and widely shared by the supporters of the Constitution. Thus, the idea that the least oppressive tax was also the most productive, the claim that adoption of the Constitution would mean a change in the structure of taxation from direct to indirect taxes and a reliance on the impost (customs duties), and the ideal of the federal government as a “waterfront state” hardly noticed by the people, were all among the most important points made in Federalist rhetoric on the fiscal powers of the Constitution. In the ratifying debate, the Federalists presented a solution to the equation of how to create a sufficiently powerful government without making unacceptable demands on society: the federal government had the right to mobilize the full resources of society at will, but in peacetime it would keep a very low profile while assuming the payment of the union's debts and the cost of defense using money raised by taxation. This federal assumption of expenses that had earlier been carried by the states, and the mode of raising the taxes to pay for it ensured that overall taxation would not increase, as the Antifederalists claimed, but would become less burdensome to the majority of the people.

Examines indirect tax reform movements in the late 1980s before the introduction of a broad‐based consumption tax: VAT. Needless to say, the adoption of VAT had a close bearing upon the changes in existing excise taxes, such as alcoholic beverages, tabacco, petrol, and commodity taxes.

This chapter begins by focusing on “conventional” channels through which public capital is deemed to affect growth, namely, productivity, complementarity, and crowding-out effects. It presents a basic two-period Allais–Samuelson Overlapping Generations model, which is extended in subsequent chapters to address a host of other issues. At the core of this model is a production function in which public capital is complementary to private capital. Several extensions of the basic model are then considered, including indirect taxation, a complementarity effect operating through the efficiency of private investment, an effect of public capital on household utility, and maintenance expenditure. The chapter also provides a discussion of optimal fiscal policy, which is studied from the perspective of growth maximization by a benevolent government, rather than in terms of social welfare maximization.

This chapter explores the different forms of taxation that exist and the underlying components of income tax. The British tax system presents households with taxes: income tax; National Insurance contributions (NICs); local government taxation; and indirect taxation through consumption. NICs are a form of tax that have better public relations than income tax. Local government taxation is one of the oldest forms of tax. Moreover, it explains how partnership and marriage are treated across the range of direct taxes. It also briefly considers how the median model family, the Meades, fare in terms of overall direct taxation under the 1979, 1997 and 2008 systems. Income tax rates were cut by the Conservatives and to a lesser extent by New Labour. The cumulative effect of reforms to National Insurance has been to bring NICs much closer to income tax.

The French economy was the largest in Europe but the complexities of its taxation system, which directly reflected the way society was constructed around privileges, made it hard for the state to tap the surplus wealth. The direct taxes were collected by networks of royal officials, organised by province, who owned their offices and pledged their credit to bridge shortfalls and delays in taxation flow. A wide range of indirect taxes were largely contracted out to the farmers general, who ran a huge company that passed funds to the king in return for a profit, but investment returns declined and the state eventually came to shoulder the entire risk. As tax yields fell the government increased the headline rates, but desperation for cash forced the king to allow privileged groups and even entire provinces to buy themselves out of future taxation, further shrinking the tax base.

Indirect taxation refers to taxation that is levied on expenditure rather than on income and is one of the most important sources of revenue for governments, particularly in middle- and low-income countries. As a result, indirect taxation is frequently included in microsimulation models. These models differ from those described thus far in that they involve the use of data that contains expenditures in addition to incomes. This chapter describes the theoretical structure of a number of different types of indirect taxation. A challenge to the simulation of indirect taxation arises in that the base datasets of microsimulation models typically do not include expenditure data. A relatively simple method for combining income and expenditure data is described. As changes in indirect taxation affect the relative prices of goods, there will either be a change in consumption patterns or a change in savings. A method to model behavioural response when modelling indirect taxation is discussed. These methods are then utilized to describe some descriptive measures for the distributional attributes of consumption and some directions for policy reform. The framework developed in this chapter is then used to model the welfare impact of changes to indirect taxation in an example simulation.

This chapter explores the international tax implications of cloud computing. Current tax laws are based heavily on concepts of physical geography, such as controlling premises and physical equipment or employing staff in the jurisdiction. The geographical concepts do not accommodate the cloud business model in any sensible way. As a consequence, the taxation of cloud providers is particularly complex and uncertain. The chapter then explains the basic rules for direct taxation of cross-border profits, which apply no matter what technology (or lack of technology) is involved. It then discusses the complex exceptions to those rules which have been developed in respect of intangible products and services, in particular relating to intellectual property, and to cross-border income from the use of computing equipment, and it examines how they might impact cloud providers. The chapter also considers the current rules which determine taxation nexus, as well as indirect taxation, particularly Value Added Tax (VAT). Finally, it looks at how the OECD and the UN are attempting to deal with the major problems with the current system.

Having laid out his critique of the economics of his day – and the policies to which it led – Galbraith felt obliged to offer some indicators as to what should be done and how. He has two main suggestions. First, he argues, it is necessary to cut the link between security and growth, to find ways of providing a basic standard of living not tied to employment. Second, the taxation system must be radically reformed in order to right the social balance between private and public production of goods and services; in particular, the tricks of income tax avoidance favouring the wealthy should be ended and the indirect taxes levied on consumption generalized. The resulting growth in tax revenues can then be used to adequately fund necessary public services. Clearly, recent history had not moved in these directions; this chapter looks at why.

This chapter is concerned with the pervasive inefficiencies in the Indian economy that impede rapid productivity growth, and the reforms needed. A major distortion is the presence of price controls and associated subsidies, explicit and hidden, for several key commodities. The subsidies have dire effects on the efficiency of resource allocation, in addition to being highly regressive. Subsidy abolition is recommended (accompanied by protection of the real incomes of poor people). There are various other distortions: in indirect taxation; in the market for land; in capital markets, bankruptcy arrangements, and access to finance; and in broad sectors such as agriculture, and industry and services. These are examined and remedies suggested. For example, the chapter advocates a uniform goods and services tax. It calls for turning upside down the existing mix of subsidies and public investment in agriculture. It argues against industrial-policy interventions that attempt to ‘pick winners’.