As a nonpartisan educational organization, the ax Foundation hasearned a reputation or independence and credibility. However, weare not devoid o perspective. All ax Foundation research is guidedby the ollowing principles o sound tax policy, which should serveas touchstones or good tax policy everywhere:
Administrative costs are a loss to society, andcomplicated taxation undermines voluntary compliance by creating incentives to shelter and disguise income.
ax legislation should be based on soundlegislative procedures and careul analysis. A good tax system requiresinormed taxpayers who understand how tax assessment, collection,and compliance works. Tere should be open hearings and revenueestimates should be ully explained and replicable.
Te ewer economic decisions that are made or tax reasons, the better. Te primary purpose o taxes is to raise neededrevenue, not to micromanage the economy. Te tax system shouldnot avor certain industries, activities, or products.
When tax laws are in constant ux, long-range nancialplanning is difcult. Lawmakers should avoid enacting temporary tax laws, including tax holidays and amnesties.
As a corollary to the principle o stability,taxpayers should rely with condence on the law as it exists whencontracts are signed and transactions made.
broad baSeS and low raTeS
As a corollary to the principle o neutrality, lawmakers should avoid enacting targeted deductions,credits and exclusions. I such tax preerences are ew, substantialrevenue can be raised with low tax rates. Broad-based taxes can alsoproduce relatively stable tax revenues rom year to year.Visit
or data, research, analysis andcommentary on important tax issues.
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