Distinguishing between "normal" and "excess" returns for tax policy

Resource Information

The work Distinguishing between "normal" and "excess" returns for tax policy represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Books.

Label

Distinguishing between "normal" and "excess" returns for tax policy

Creator

• Neubig, T.S
• Reynolds, H

Subject

• intellectual property
• debt capital
• tax policy
• resource rent (tax)
• equity capital

Language

eng

Summary

This paper explores the practical challenges tax policy analysts face when trying to apply differential taxation to "normal" and "excess" returns. The distinction between these two elements is being increasingly used in tax policy. The problem is that there is no clear definition for a "normal" return. While it is often equated to a risk-free return, or the return available on a ten-year government bond, many commentators agree that it should incorporate a risk element. The typical rationale for applying differential taxation stems from the desire to achieve neutral taxation, i.e. minimise the real economic responses of taxpayers due to the wedge taxation imposes between before-tax and after-tax returns. A set of important questions are raised for tax policy analysts to consider. Two crucial factors that make the distinction challenging are heterogeneity and uncertainty. Given the potential for unintended consequences, this is an important issue that warrants more discussion and thought

Geographic coverage

International

Index

no index present

Language note

English

Literary form

non fiction

Series statement

OECD Taxation Working Papers

Series volume

no. 28