The huge amount of unsold goods and millions of unemployed workers denied SAY’s law which stated that overproduction crises could not occur as the supply of goods and services automatically create their own demand,
Keynes rejected Say’s law which considered the full employment of labor and other productive factors as a constant of the economic system, an underemployment equilibrium was instead possible because as income increases, consumption grows less than proportionally, to maintain a certain volume of employment it is necessary that sufficient investments are made to absorb the difference between total production and consumption, hence the need for state intervention to support global demand which has as a consequence an increase in consumption and investment and therefore ‘occupation.
Keynes suggests financing public expenditure even in deficit and through the placement of public debt securities with savers and credit institutions.The market can cause intolerable inequalities in a modern society because the most disadvantaged subjects do not have sufficient income to satisfy their needs, the state must therefore guarantee everyone a minimum standard of living and therefore redistribute wealth among citizens, taxing the highest incomes and transferring a part of it to holders of low income, to carry out its numerous functions the state it must have the resources it obtains from households and businesses through taxation (direct and indirect taxes) and parafiscality (social contributions).
Taxes are sums that the private person must pay to the public body without obtaining an immediate consideration even if the revenues constituted by the taxes provide services to the community, the elements of the tax are the object or tax base which is the value expressed in currency on which the tax is applied and the rate which is the ratio between the amount of the tax and the tax base
Taxes are divided into:
- Direct: if the immediate financial manifestations of the ability to pay are affected
- Indirect: if they affect the mediated manifestations of the ability to contribute, ie the consumption or transfer of goods.
- Personal: because they affect the wealth of an individual taking into account his ability to pay
- Real: hit without taking into account the personal economic situation of the taxpayer
- General: when it affects all branches of economic activity equally
- Special: when it affects only some or all branches of economic activity but with different rates
- Ordinary: if it is permanent
- Extraordinary: if it is of a temporary nature
- Proportional: when its amount increases proportionally to the tax base, ie when the rate is constant.
- Progressive: when its amount increases more than proportional to the tax base, that is, when the rate is increasing
- Regressive: when its amount increases to an extent less than proportional to the tax base, that is, when the rate is increasing,
The principle of progressivity can be found in article 53.
(all are required to contribute to public expenses based on their ability to pay. The tax system is based on progressive criteria.
SP: That is, everyone must participate in public spending based on their ability to pay, we find the principles Progressivity criterion: this principle requires that the part of income that the taxpayer must pay in the form of tax grows in proportion to the increase in income, that is of perceived earnings. In this way, the percentage to be paid to the tax authorities (tax rate) is lower for those who earn less and higher for those who have greater economic income. This criterion corresponds to a principle of justice, as a fair tax system must require greater sacrifices from those who enjoy a higher income. The tax grows with the increase in income.
The importance of the progressive criterion lies in the burden on the wealthiest social classes so as to be able to help and support social classes in difficulty, guaranteeing fundamental social rights and services such as public education, health care, social security and indemnity unemployment, criteria on which the Italian Welfare State is based.
However, it should be noted that the criteria of ability to pay and progressivity do not exempt citizens in difficulty from indirect taxes, the best example of which is VAT, the value added tax.
• Continuous progressivity: the rate increases continuously as the tax base increases
• By class: constant rate
• Scagllioni: different rates apply
• Deductions: a constant rate is applied to the tax base decreased by a fixed amount
The legal principles of taxes are the generality and uniformity which can be realized through three theories:
- Theory of benefit: everyone should pay taxes to the extent that he receives public services from the state but the state provides public services below cost to the less well-off by financing them with money taken from the rich through taxes
- Theory of sacrifice the tax burden should be shared among taxpayers taking into account the sacrifice that the payment of taxes entails for each of them
- Theory of the ability to pay
- While the administrative principles of taxes are the
• Certainty of taxes: that is, the tax must be certain and not arbitrary, the amount to be paid and the manner must be established by law in a clear and precise manner.
• Convenient collection: collection must be carried out in times and ways that cause the taxpayer as little time as possible
• Economical and collection: the costs of taxes must be as low as possible
An excessive tax burden can determine negative effects such as the decrease in the incentive to work and produce, the reduction of savings and the stimulus to expropriate capital to countries where the tax burden is lower. of those who are affected by taxes and are:
• Tax evasion: consists of the taxpayer illegally evading the payment of the tax in whole or in part.
• Circumvention: attitude of those who circumvent the rule without violating it evades the obligation to pay the tax by making use of the ambiguities of the legislation.
• Removal: consists of modifying one’s consumption or production behavior so as not to have to pay the tax
• Transfer: the burden can be transferred to another person until it reaches a person who can no longer transfer the burden
• Diffusion: a tax affects a subject who then reacts with other behaviors.
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