47-791: [REDACTED] Look up cfp in Wiktionary, the free dictionary. CFP may refer to: Businesses and organizations [ edit ] Center for Freedom and Prosperity , CF&P, US tax reform advocacy Compagnie Française des Pétroles, the first incarnation of TotalEnergies Concentración de Fuerzas Populares , former political party in Ecuador Economics, finance, and law [ edit ] California Fully Protected Species , legal wildlife designation Canadian Firearms Program , regulatory body Certified Financial Planner , certification CFP franc , currency used in
94-601: A Sziklai pair Cyan fluorescent protein , a derivative of the green fluorescent protein Sports [ edit ] 25 metre center-fire pistol , a shooting sport College Football Playoff , annual college football tournament in the United States Other uses [ edit ] Call for papers , a method used in academic contexts for collecting articles of work Christian Focus Publications , British publishing house Community Facilities Program ,
141-554: A check for $ 4,000. The NIT is intended to replace not just the USA 's income tax, but also many benefits low income American households receive, such as food stamps and Medicaid . The NIT is designed to avoid the welfare trap —effective high marginal tax rates arising from the rules reducing benefits as market income rises. An objection to the NIT is that it is welfare without a work requirement. Those who would owe negative tax would be receiving
188-487: A flat sales tax to target all consumption, which can be modified with rebates or exemptions to remove regressive effects, such as the proposed FairTax in the United States. A flat tax system and income taxes overall are not inherently border-adjustable; meaning the tax component embedded into products via taxes imposed on companies (including corporate taxes and payroll taxes ) are not removed when exported to
235-451: A flat rate. It includes independent countries and other autonomous jurisdictions. The tax rate listed is the one that applies to income from work, but does not include mandatory contributions to social security . In some jurisdictions, different rates (also flat) apply to other types of income, such as from investments. The table below lists jurisdictions where personal income is taxed by multiple government levels, and at least one level uses
282-421: A flat rate. The tax rates listed are those that apply to income from work, except as otherwise noted. Where a range of rates is listed, it means that the flat rate varies by location, not progressive rates. Despite not having a permanent population, some jurisdictions tax the local income of temporary workers, using a flat rate. The combined county and municipal tax rate ranges from 28.98 to 35.3%. In Gotland ,
329-554: A flat tax system could be combined with tariffs and credits to act as border adjustments (the proposed Border Tax Equity Act in the United States attempts this). Implementing an income tax with a border adjustment tax credit is a violation of the World Trade Organization agreement. Tax exemptions (allowances) on low income wages, a component of most income tax systems could mitigate this issue for high labour content industries like textiles that compete Globally. In
376-431: A flat tax, there are fewer incentives than in the current system to create tax shelters, and to engage in other forms of tax avoidance. Flat tax critics contend that a flat tax system could be created with many loopholes, or a progressive tax system without loopholes, and that a progressive tax system could be as simple, or simpler, than a flat tax system. A simple progressive tax would also discourage tax avoidance. Under
423-426: A foreign country (see Effect of taxes and subsidies on price ) . Taxation systems such as a sales tax or value added tax can remove the tax component when goods are exported and apply the tax component on imports. The domestic products could be at a disadvantage to foreign products (at home and abroad) that are border-adjustable, which would affect the global competitiveness of a country. However, it's possible that
470-544: A form of welfare without having to make an effort to obtain employment. Another objection is that the NIT subsidizes industries employing low-cost labor, but this objection can also be made against current systems of benefits for the working poor . A capped flat tax is one in which income is taxed at a flat rate until a specified cap amount is reached. For example, the United States Federal Insurance Contributions Act tax
517-534: A grant and loan program administered by the Rural Housing Service See also [ edit ] [REDACTED] Search for "cfp" on Misplaced Pages. All pages with titles beginning with CFP All pages with titles containing CFP Topics referred to by the same term [REDACTED] This disambiguation page lists articles associated with the title CFP . If an internal link led you here, you may wish to change
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#1732765868625564-458: A huge growth of revenue from corporate income tax (by 39% compared with the previous year) and surpassed the Ministry of Finance's own forecast (27% year on year). The budget surplus rose despite considerable emergency spending at the end of the year. There were several reasons for this beneficial effect: (i) the tax rate limited the incentives for tax evasion, (ii) the optimism at the beginning of
611-406: A pure flat tax without deductions, every tax period a company would make a single payment to the government covering the taxes on the employees and the taxes on the company profit. For example, suppose that in a given year, a company called ACME earns a profit of 3 million, spends 2 million in wages, and spends 1 million on other expenses that under the tax law is taxable income to recipients, such as
658-531: A subsequent section, various proposals for flat tax-like schemes are discussed, these differ mainly on how they approach with the following issues of deductions, defining income, and policy implementation. Most countries tax personal income at the national level using progressive rates, but some use a flat rate. Most countries that have or had a flat tax on personal income at the national level are former communist countries or islands . In some countries, subdivisions are allowed to tax personal income in addition to
705-402: A year would owe tax amounting to 0.20 × (74,000 − 54,000) = $ 4,000, as would be the case under a flat tax system with deductions. Families of four earning less than $ 54,000 per year, however, would experience a "negative" amount of tax (that is, the family would receive money from the government instead of paying to the government). For example, if the family earned $ 34,000 a year, it would receive
752-481: Is not directed at specifying graduated tax rates). As it now stands, the U.S. Internal Revenue Code is over several million words long, and contains many loopholes, deductions, and exemptions which, advocates of flat taxes claim, render the collection of taxes and the enforcement of tax law complicated and inefficient. It is further argued that current tax law slows economic growth by distorting economic incentives, and by allowing, even encouraging, tax avoidance. With
799-403: Is 6.2% of gross compensation up to a limit (in 2022, up to $ 147,000 of earnings, for a maximum tax of $ 9,114). This cap has the effect of turning a nominally flat tax into a regressive tax . In devising a flat tax system, several recurring issues must be enumerated, principally with deductions and the identification of when money is earned. Since a central tenet of the flat tax is to minimize
846-421: Is a tax with a single rate on the taxable amount, after accounting for any deductions or exemptions from the tax base. It is not necessarily a fully proportional tax . Implementations are often progressive due to exemptions, or regressive in case of a maximum taxable amount. There are various tax systems that are labeled "flat tax" even though they are significantly different. The defining characteristic
893-486: Is a return to capital (dividends, interest, royalties, profits of unincorporated businesses) is positively correlated with total household income. Hence a flat tax limited to wages would seem to leave the wealthy better off. Modifying the tax base can change the effects. A flat tax could be targeted at income (rather than wages), which could place the tax burden equally on all earners, including those who earn income primarily from returns on investment. Tax systems could utilize
940-669: Is a single, large, fixed deduction. This large fixed deduction would compensate for the elimination of various existing deductions and would simplify taxes, having the side-effect that many (mostly low income) households will not have to file tax returns. Designed by economists at the Hoover Institution , Hall–Rabushka is a flat tax on consumption . Principally, Hall–Rabushka accomplishes a consumption tax effect by taxing income and then excluding investment. Robert Hall and Alvin Rabushka have consulted extensively in designing
987-444: Is a system of taxation where one tax rate is applied to all personal income with no deductions. Where deductions are allowed, a 'flat tax' is a progressive tax with the special characteristic that, above the maximum deduction, the marginal rate on all further income is constant. Such a tax is said to be marginally flat above that point. The difference between a true flat tax and a marginally flat tax can be reconciled by recognizing that
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#17327658686251034-442: Is actually a shorthand for the more proper marginally flat tax. One type of flat tax would be imposed on all income once: at the source of the income. Hall and Rabushka proposed an amendment to the U.S. Internal Revenue Code that would implement the variant of the flat tax they advocate. This amendment, only a few pages long, would replace hundreds of pages of statutory language (although most statutory language in taxation statutes
1081-403: Is an American nonprofit organization that advocates for flat taxes , territorial taxation systems, and offshore tax havens. The organization and its subsidiary, Center for Freedom and Prosperity Foundation (a tax-exempt organization), publish studies and conduct seminars analyzing the benefits of jurisdictional tax competition , financial privacy and fiscal sovereignty. The stated objectives of
1128-599: Is not fully defined until it differentiates new untaxed income from a pass-through of already taxed income. Taxes, in addition to providing revenue, can be potent instruments of policy. For example, it is common for governments to encourage social policy such as home insulation or low income housing with tax credits rather than constituting a ministry to implement these policies. In a flat tax system with limited deductions such policy administration, mechanisms are curtailed. In addition to social policy, flat taxes can remove tools for adjusting economic policy as well. For example, in
1175-432: Is that an expense (since the producer has to purchase jars somehow) or a sheltering of income through investment? Flat tax systems can differ greatly in how they accommodate such gray areas. For example, the "9-9-9" flat tax proposal would allow businesses to deduct purchases but not labor costs, which effectively taxes labor-intensive industrial revenue at a higher rate. How deductions are implemented will dramatically change
1222-423: Is the existence of only one tax rate other than zero, as opposed to multiple non-zero rates that vary depending on the amount subject to taxation. A flat tax system is usually discussed in the context of an income tax , where progressivity is common, but it may also apply to taxes on consumption , property or transfers . Flat tax proposals differ in how the subject of the tax is defined. A true flat-rate tax
1269-563: The CFP are: Daniel J. Mitchell has described the OECD as "a bunch of crazy European socialists". In 2012, Mitchell’s colleague Andy Quinlan offered to brief Jennifer Mossack, working at Mossack Fonseca on "what CF&P is doing in Washington" and "the current legislative climate on offshore tax and information exchange schemes." Flat tax A flat tax (short for flat-rate tax )
1316-558: The French overseas possessions Common Fisheries Policy of EU Science and technology [ edit ] Canadian Family Physician , a peer-reviewed open-access medical journal published by the College of Family Physicians of Canada C form-factor pluggable , agreement for form-factor for digital signals Computers, Freedom, and Privacy , annual North American academic conference Complementary feedback pair, also known as
1363-436: The United States, short-term capital gains are taxed at a higher rate than long-term gains as means to promote long-term investment horizons and damp speculative fluctuation. Thus, if one assumes that government should be active in policy decisions such as this, then claims that flat taxes are cheaper/simpler to administer than others are incomplete until they factor in costs for alternative policy administration. In general,
1410-577: The amount of the gain would be withheld and sent to the IRS. If there were a loss, the amount would be reported to the IRS. The loss would offset gains, and then the IRS would settle up with taxpayers at the end of the period. Lacking deductions, this scheme cannot be used to implement economic and social policy indirectly by tax credits and thus, as noted above, the simplifications to the government's revenue collection apparatus might be offset by new government ministries required to administer those policies. Russia
1457-457: The compartmentalization of incomes into myriad special or sheltered cases, a vexing problem is deciding when income occurs. This is demonstrated by the taxation of interest income and stock dividends. The shareholders own the company and so the company's profits belong to them. If a company is taxed on its profits, then the funds paid out as dividends have already been taxed. It's a debatable question if they should subsequently be treated as income to
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1504-430: The country's EU membership, (iii) and the increase in foreign direct investment, which reached an all-time annual record of €9 billion (about 11% of GDP). Taxes other than the income tax (for example, taxes on sales and payrolls) tend to be regressive. Under such a structure, those with lower incomes tend to pay a higher proportion of their income in total taxes than the affluent do. The fraction of household income that
1551-411: The deductions of different people). Furthermore, if income of differing types are segregated (e.g., pass-through, long term cap gains, regular income, etc.) then complications ensue. For example, if realized capital gains were subject to the flat tax, the law would require brokers and mutual funds to calculate the realized capital gain on all sales and redemption. If there were a gain, a tax equal to 15% of
1598-417: The earnings. For example, grocery stores typically earn pennies on every dollar of revenue; they could not pay a tax rate of 25% on revenues unless their markup exceeded 25%. Thus, corporations must be able to deduct operating expenses even if individuals cannot. A practical dilemma arises as to identifying what is an expense for a business. For example, if a peanut butter producer purchases a jar manufacturer,
1645-412: The effective total tax, and thus the flatness of the tax. Thus, a flat tax proposal is not fully defined unless the proposal includes a differentiation between deductible and non-deductible expenses. Flat tax benefits higher income brackets progressively due to decline in marginal value . If a flat tax system has a large exemption, it is effectively a progressive tax . As a result, the term "flat tax"
1692-464: The flat tax systems in Eastern Europe. The negative income tax (NIT), which Milton Friedman proposed in his 1962 book Capitalism and Freedom , is a type of flat tax. The basic idea is the same as a flat tax with personal deductions, except that when deductions exceed income, the taxable income is allowed to become negative rather than being set to zero. The flat tax rate is then applied to
1739-492: The introduction of a 10% corporate income tax rate for 2007, to be followed by a 10% personal income tax rate the next year. The IMF was wary of this reform, arguing that the simplified tax system would lower the budget surplus and encourage a larger current account deficit. At the time of these discussions, however, the Bulgarian government did not need external financing and proceeded with its reform plans. The year 2007 brought
1786-503: The latter simply excludes certain types of income from being defined as taxable income; hence, both kinds of tax are flat on taxable income. Modified flat taxes have been proposed which would allow deductions for a very few items, while still eliminating the vast majority of existing deductions. Charitable deductions and home mortgage interest are the most discussed examples of deductions that would be retained, as these deductions are popular with voters and are often used. Another common theme
1833-440: The link to point directly to the intended article. Retrieved from " https://en.wikipedia.org/w/index.php?title=CFP&oldid=1251393229 " Category : Disambiguation pages Hidden categories: Short description is different from Wikidata All article disambiguation pages All disambiguation pages Center for Freedom and Prosperity The Center for Freedom and Prosperity ( CFP or CF&P )
1880-464: The national government. Many of these subdivisions use a flat rate, even if their national government uses progressive rates. Examples are all counties and municipalities of the Nordic countries , all prefectures and municipalities of Japan , and some subdivisions of Italy and of the United States . The table below lists jurisdictions where personal income is taxed by only one government level, using
1927-408: The question of how to eliminate deductions is fundamental to the flat tax design; deductions dramatically affect the effective "flatness" in the tax rate. Perhaps the single biggest necessary deduction is for business expenses. If businesses were not allowed to deduct expenses, businesses with a profit margin below the flat tax rate could never earn any money since the tax on revenues would always exceed
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1974-489: The receipt of stock options, bonuses, and certain executive privileges. Given a flat rate of 15%, ACME would then owe the U.S. Internal Revenue Service (IRS) (3M + 2M + 1M) × 0.15 = 900,000. This payment would, in one fell swoop, settle the tax liabilities of ACME's employees as well as the corporate taxes owed by ACME. Most employees throughout the economy would never need to interact with the IRS, as all tax owed on wages, interest, dividends, royalties, etc. would be withheld at
2021-418: The resulting "negative income," resulting in a "negative income tax" that the government would owe to the household—unlike the usual "positive" income tax, which the household owes the government. For example, let the flat rate be 20%, and let the deductions be $ 20,000 per adult and $ 7,000 per dependent. Under such a system, a family of four making $ 54,000 a year would owe no tax. A family of four making $ 74,000
2068-408: The shareholders and thus subject to further tax. A similar issue arises in deciding if interest paid on loans should be deductible from the taxable income since that interest is in-turn taxed as income to the loan provider. There is no universally agreed answer to what is fair. For example, in the United States, dividends are not deductible but mortgage interest is deductible. Thus a Flat Tax proposal
2115-441: The source. The main exceptions would be employees with incomes from personal ventures. The Economist claims that such a system would reduce the number of entities required to file returns from about 130 million individuals, households, and businesses, as at present, to a mere 8 million businesses and self-employed. However, this simplicity depends on the absence of deductions of any kind being allowed (or at least no variability in
2162-432: Was considered a prime case of the success of a flat tax; the real revenues from its personal income tax rose by 25.2% in the first year after the country introduced a flat tax in 2001, followed by a 24.6% increase in the second year, and a 15.2% increase in the third year. The Russian example is often used as proof of the validity of this analysis, despite an International Monetary Fund study in 2006 which found that there
2209-540: Was no sign "of Laffer -type behavioral responses generating revenue increases from the tax cut elements of these reforms" in Russia or in other countries. In 2021, Russia ended its flat tax on personal income as it introduced a second higher tax rate. Bulgaria's entry into the EU in 2007 was marked by a spur of reforms aimed at reducing the large share of informal economic activity, estimated at 43% in 2006. Parliament approved
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