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Concept
Tax shift
Summary
Tax shift or Tax swap is a change in taxation that eliminates or reduces one or several taxes and establishes or increases others while keeping the overall revenue the same. The term can refer to desired shifts, such as towards Pigovian taxes (typically sin taxes and ecotaxes) as well as (perceived or real) undesired shifts, such as a shift from multi-state corporations to small businesses and families.
Definition:
Tax shift is a kind of economic phenomenon in which the taxpayer transfers the tax burden to the purchaser or supplier by increasing the sales price or depressing the purchase price during the process of commodity exchange.
- Tax shift is the redistribution of tax burden. Its economic essence is the redistribution of national income of everyone. The absence of redistribution of national income does not constitute an active of tax shift.
- Tax shift is an objective process of economic movement. It does not include any emotional factors. Whether taxpayers take the initiative to raise or lower prices or passively accept price fluctuations is not related to tax shift. Whether the economic relationship between the taxpayer and the tax bearer is a class opposition or the unity opposition, it is also unrelated to the tax shift. 3.Tax shift is achieved through price changes. The price mentioned here includes not only the price of the output but also the price of the element. The price changes mentioned here include not only direct price increase and price reduction, but also indirect price increase and price reduction. No price change, no tax shift. It has the following three characteristics: (1) It is closely linked with price increase and decrease; (2) It is the redistribution of tax burdens among economic entities, and it is also a redistribution of economic interests. The result will inevitably lead to inconsistency between taxpayers and tax bearer; (3) It is the taxpayer's proactive behavior. In general, the existence of tax shift mainly depends on the following two conditions: The existence of commodity economy Tax shift is achieved through commodity price changes in commodity exchange.
Official source
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