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120-526: Protectionism was the ideological cement holding the Republican coalition together. High tariffs were used by Republicans to promise higher sales to business, higher wages to industrial workers, and higher demand for farm products. Progressive insurgents said it promoted monopoly . Democrats said it was a tax on the little man. It had greatest support in the Northeast , and greatest opposition in

240-606: A credit for income taxes paid to other jurisdictions of the same sort. Thus, a credit is allowed at the national level for income taxes paid to other countries. Many income tax systems permit other credits of various sorts, and such credits are often unique to the jurisdiction. Some jurisdictions, particularly the United States and many of its states and Switzerland , impose the higher of regular income tax or an alternative tax. Switzerland and U.S. states generally impose such tax only on corporations and base it on capital or

360-513: A 2016 study found that these tariffs had no impact on employment and wages in the US tire industry. In 2018, EU Trade Commissioner Cecilia Malmström stated that the US was "playing a dangerous game" in applying tariffs on steel and aluminum imports from most countries and stated that she saw the Trump administration's decision to do so as both "pure protectionist" and "illegal". The tariffs imposed by

480-468: A concept of net increase. In 9 CE, Emperor Wang Mang of the Xin dynasty (9 to 23 CE) established the first income tax through a 10% tax of net earnings from wild herb and fruit collection, fishing, shepherding, and various nonagricultural activities and forms of trading. People were obligated to report their taxes to the government and officials would audit these reports. The penalty for evading this tax

600-560: A few countries, cities also impose income taxes. The system may be integrated (as in Germany) with taxes collected at the federal level. In Quebec and the United States, federal and state systems are independently administered and have differences in determination of taxable income. Retirement oriented taxes, such as Social Security or national insurance , also are a type of income tax, though not generally referred to as such. In

720-412: A free market, where there is no such total loss. Economist Stephen P. Magee claims the benefits of free trade outweigh the losses by as much as 100 to 1. Protectionism has been accused of being one of the major causes of war. Proponents of this theory point to the constant warfare in the 17th and 18th centuries among European countries whose governments were predominantly mercantilist and protectionist,

840-439: A levy of 2 old pence in the pound ( 1 ⁄ 120 ) on incomes over £60 (equivalent to £6,700 in 2023), and increased up to a maximum of 2 shillings in the pound (10%) on incomes of over £200. Pitt hoped that the new income tax would raise £10 million a year, but actual receipts for 1799 totalled only a little over £6 million. Pitt's income tax was levied from 1799 to 1802, when it was abolished by Henry Addington during

960-455: A limited set of circumstances and that trade policy will rarely be the best response to the problems [of globalization]". According to economic historians Findlay and O'Rourke, there is a consensus in the economics literature that protectionist policies in the interwar period "hurt the world economy overall, although there is a debate about whether the effect was large or small." Economic historian Paul Bairoch argued that economic protection

1080-506: A new source of funds. The new income tax, based on Addington's model, was imposed on incomes above £150 (equivalent to £19,487 in 2023). Although this measure was initially intended to be temporary, it soon became a fixture of the British taxation system. A committee was formed in 1851 under Joseph Hume to investigate the matter, but failed to reach a clear recommendation. Despite the vociferous objection, William Gladstone , Chancellor of

1200-591: A person had in property, the more tax they paid. Taxes were collected from individuals. One of the first recorded taxes on income was the Saladin tithe introduced by Henry II in 1188 to raise money for the Third Crusade . The tithe demanded that each layperson in England and Wales be taxed one tenth of their personal income and moveable property. In 1641, Portugal introduced a personal income tax called

1320-412: A residential system of taxation usually allow deductions or credits for the tax that residents already pay to other countries on their foreign income. Many countries also sign tax treaties with each other to eliminate or reduce double taxation . Countries do not necessarily use the same system of taxation for individuals and corporations. For example, France uses a residential system for individuals but

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1440-426: A similar measure. Income tax is generally collected in one of two ways: through withholding of tax at source and/or through payments directly by taxpayers. Nearly all jurisdictions require those paying employees or nonresidents to withhold income tax from such payments. The amount to be withheld is a fixed percentage where the tax itself is at a fixed rate. Alternatively, the amount to be withheld may be determined by

1560-585: A temporary waiver to enable more widespread production of the vaccines, since suppressing the virus as quickly as possible benefits the entire world. The waivers would be in addition to the existing, but cumbersome, flexibilities in TRIPS allowing countries to impose compulsory licenses. Over 100 developing nations supported the waiver but it was blocked by the G7 members. This blocking was condemned by 400 organizations including Doctors Without Borders and 115 members of

1680-430: Is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth. However, protectionism can be used to raise government revenue and enable access to intellectual property, including essential medicines. Protectionism is frequently criticized by economists as harming

1800-492: Is a consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers have a significantly positive effect on economic growth . Some scholars, such as Douglas Irwin , have implicated protectionism as the cause of some economic crises, most notably the Great Depression . On the contrary, Paul Krugman , winner of

1920-430: Is a very wide variation in the amount of taxation in different countries. For example, countries such as Singapore, Belgium and United Arab Emirates levy low income tax on interest and dividends, while countries such as Denmark, France and United States have very high income tax for this type of income. For profits that are earned by selling assets or a real estate (capital gains), the income tax varies between countries, and

2040-432: Is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income. The tax rate may increase as taxable income increases (referred to as graduated or progressive tax rates). The tax imposed on companies is usually known as corporate tax and is commonly levied at a flat rate. Individual income is often taxed at progressive rates where

2160-423: Is different from for any other types of income. Rental income may also sometimes be subject to income tax, but many countries offer deductions or even exemptions for this type of income. Income taxes are used in most countries around the world. The tax systems vary greatly and can consist of a flat fixed rate , progressive , or regressive , structures depending on the type of tax. Comparison of tax rates around

2280-441: Is higher in the US than in countries like Germany or Italy. In countries with a sizeable black market , the voluntary compliance rate is very low and may be impossible to properly calculate. Income taxes are separately imposed by sub-national jurisdictions in several countries with federal systems. These include Canada , Germany , Switzerland, and the United States , where provinces, cantons, or states impose separate taxes. In

2400-828: Is included in income for individuals may differ from what is included for entities. The timing of recognizing income may differ by type of taxpayer or type of income. Income generally includes most types of receipts that enrich the taxpayer, including compensation for services, gain from sale of goods or other property, interest, dividends, rents, royalties, annuities, pensions, and all manner of other items. Many systems exclude from income part or all of superannuation or other national retirement plan payments. Most tax systems exclude from income health care benefits provided by employers or under national insurance systems. Nearly all income tax systems permit residents to reduce gross income by business and some other types of deductions. By contrast, nonresidents are generally subject to income tax on

2520-529: Is nearly always allowed for recovery of costs of assets used in the activity. Rules on capital allowances vary widely, and often permit recovery of costs more quickly than ratably over the life of the asset. Most systems allow individuals some sort of notional deductions or an amount subject to zero tax. In addition, many systems allow deduction of some types of personal expenses, such as home mortgage interest or medical expenses. Only net income from business activities, whether conducted by individuals or entities

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2640-427: Is not causation... there is no reason for necessarily thinking that import protection was a good policy just because the economic outcome was good: the outcome could have been driven by factors completely unrelated to the tariff, or perhaps could have been even better in the absence of protection." Irwin furthermore writes that "few observers have argued outright that the high tariffs caused such growth." One study by

2760-473: Is only one tax bracket, or one remains within the same tax bracket, there will still be bracket creep resulting in a higher proportion of income being paid in tax. That is, although the marginal tax rate remains unchanged with inflation, the average tax rate will increase. Most progressive tax systems are not adjusted for inflation. As wages and salaries rise in nominal terms under the influence of inflation they become more highly taxed, even though in real terms

2880-648: Is tax resident and also pay tax to other country where he or she is non-resident. This creates the situation of Double taxation which needs assessment of Double Taxation Avoidance Agreement entered by the jurisdictions where the tax payer is assessed as resident and non-resident for the same transaction. Residence is often defined for individuals as presence in the jurisdiction for more than 183 days. Most jurisdictions base residence of entities on either place of organization or place of management and control. Most systems define income subject to tax broadly for residents, but tax nonresidents only on specific types of income. What

3000-449: Is taxable, with few exceptions. Many countries require business enterprises to prepare financial statements which must be audited. Tax systems in those countries often define taxable income as income per those financial statements with few, if any, adjustments. A few jurisdictions compute net income as a fixed percentage of gross revenues for some types of businesses, particularly branches of nonresidents. Nearly all systems permit residents

3120-495: Is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas , and a variety of other government regulations. Proponents argue that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors and raise government revenue . Opponents argue that protectionist policies reduce trade , and adversely affect consumers in general (by raising

3240-765: Is the exception and protectionism the rule". According to economic historians Douglas Irwin and Kevin O'Rourke, "shocks that emanate from brief financial crises tend to be transitory and have a little long-run effect on trade policy, whereas those that play out over longer periods (the early 1890s, early 1930s) may give rise to protectionism that is difficult to reverse. Regional wars also produce transitory shocks that have little impact on long-run trade policy, while global wars give rise to extensive government trade restrictions that can be difficult to reverse." One study shows that sudden shifts in comparative advantage for specific countries have led some countries to become protectionist: "The shift in comparative advantage associated with

3360-426: Is the most distorted exchange rate policy any great nation has ever followed”. He notes that an undervalued renminbi is tantamount to imposing high tariffs or providing export subsidies. A cheaper currency improves employment and competitiveness because it makes imports more expensive while making domestic products more attractive. He expects Chinese surpluses to destroy 1.4 million American jobs by 2011. There

3480-543: The American Revolution , which came about ostensibly due to British tariffs and taxes. According to a slogan of Frédéric Bastiat (1801–1850), "When goods cannot cross borders, armies will." On the other hand, archaeologist Lawrence H. Keeley argues in his book War Before Civilization that disputes between trading partners escalate to war more frequently than disputes between nations that don't trade much with each other. The Opium Wars were fought between

3600-635: The Doha Declaration , was issued in November 2001, which indicated that TRIPS should not prevent states from dealing with public health crises and allowed for compulsory licenses . After Doha, PhRMA , the United States and to a lesser extent other developed nations began working to minimize the effect of the declaration. In 2020, conflicts re-emerged over patents, copyrights and trade secrets related to COVID-19 vaccines , diagnostics and treatments. South Africa and India proposed that WTO grant

3720-742: The European Parliament . In June 2022, after extensive involvement of the European Union , the WTO instead adopted a watered-down agreement that focuses only on vaccine patents, excludes high-income countries and China, and contains few provisions that are not covered by existing flexibilities. Proponents of protectionism argue that tariffs raise government revenue via customs . Developing countries , including least developed countries (LDCs), often do not collect income taxes because personal incomes are often too low to tax and they lack

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3840-502: The Peace of Amiens . Addington had taken over as prime minister in 1801, after Pitt's resignation over Catholic Emancipation . The income tax was reintroduced by Addington in 1803 when hostilities with France recommenced, but it was again abolished in 1816, one year after the Battle of Waterloo . Opponents of the tax, who thought it should only be used to finance wars, wanted all records of

3960-596: The South and West . The Midwest was the battle ground. President Taft was disliked by Theodore Roosevelt because he didn't reduce tariffs which led to Roosevelt running for re-election. Since there were two Republicans in the vote, it led to the party's votes being split. That soon led to Woodrow Wilson being elected. However, the United States Senate speedily substituted a bill written by Aldrich, calling for fewer reductions and more increases in tariffs. It

4080-777: The Trump administration during the China–United States trade war led to a reduction in the United States trade deficit with China. Defunct Great Britain , and England in particular, became one of the most prosperous economic regions in the world between the late 1600s and early 1800s as a result of being the birthplace of the Industrial Revolution that began in the mid-eighteenth century. The government protected its merchants—and kept others out—by trade barriers, regulations, and subsidies to domestic industries in order to maximize exports from and minimize imports to

4200-514: The UK and China over the right of British merchants to engage in the free trade of opium . For many opium users, what started as recreation soon became a punishing addiction: many people who stopped ingesting opium suffered chills, nausea, and cramps, and sometimes died from withdrawal. Once addicted, people would often do almost anything to continue to get access to the drug. Barbara Tuchman says both European intellectuals and leaders overestimated

4320-489: The United Kingdom between 1815 and 1846, and enhanced the profits and political power associated with land ownership . The laws raised food prices and the costs of living for the British public, and hampered the growth of other British economic sectors, such as manufacturing, by reducing the disposable income of the British public. The Prime Minister, Sir Robert Peel , a Conservative , achieved repeal in 1846 with

4440-503: The WTO benefited US consumers, as the price of Chinese goods were substantially reduced. Harvard economist Dani Rodrik argues that while globalization and free trade does contribute to social problems, "a serious retreat into protectionism would hurt the many groups that benefit from trade and would result in the same kind of social conflicts that globalization itself generates. We have to recognize that erecting trade barriers will help in only

4560-547: The décima . The inception date of the modern income tax is typically accepted as 1799, at the suggestion of Henry Beeke , the future Dean of Bristol . This income tax was introduced into Great Britain by Prime Minister William Pitt the Younger in his budget of December 1798, to pay for weapons and equipment for the French Revolutionary War . Pitt's new graduated (progressive) income tax began at

4680-474: The "reciprocity period", the average tariff declined substantially until it leveled off at 5 percent. Economist Paul Bairoch documented that the United States imposed among the highest rates in the world from around the founding of the country until the World War II period, describing the United States as "the mother country and bastion of modern protectionism" since the end of the 18th century and until

4800-490: The 1846 Corn Laws debate, arguing that it destroyed what had been "some of the finest manufacturers of the world" in 1812. The countries of Western Europe began to steadily liberalize their economies after World War II and the protectionism of the interwar period, but John Tsang , then Hong Kong 's Secretary for Commerce, Industry and Technology and chair of the Sixth Ministerial Conference of

4920-543: The 18th century, Adam Smith famously warned against the "interested sophistry" of industry, seeking to gain an advantage at the cost of the consumers. Friedrich List saw Adam Smith's views on free trade as disingenuous, believing that Smith advocated for free trade so that British industry could lock out underdeveloped foreign competition. Some have argued that no major country has ever successfully industrialized without some form of economic protection. Economic historian Paul Bairoch wrote that "historically, free trade

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5040-482: The 1950s, steel in the 1960s, automobiles in the 1970s, and electronics in the 1980s. In each case, the rapid expansion in Japan's exports created difficulties for its trading partners and the use of protectionism as a shock absorber." According to economic historian Douglas Irwin, a common myth about US trade policy is that low tariffs harmed American manufacturers in the early 19th century and then that high tariffs made

5160-609: The 19th century, such as the Russian Empire and Austro-Hungarian Empire which remained highly protectionist. The Ottoman Empire also became increasingly protectionist. In the Ottoman Empire's case, however, it previously had liberal free trade policies during the 18th to early 19th centuries, which British prime minister Benjamin Disraeli cited as "an instance of the injury done by unrestrained competition" in

5280-557: The Cobden Chevalier treaty and three decades after British Repeal, Germany "had virtually become a free trade country" (Bairoch, 41). Average duties on manufactured products had declined to 9–12% on the Continent, a far cry from the 50% British tariffs, and numerous prohibitions elsewhere, of the immediate post-Waterloo era (Bairoch, table 3, p. 6, and table 5, p. 42)." Some European powers did not liberalize during

5400-746: The Depression, Britain passed the Import Duties Act of 1932 , which imposed a general tariff of 10% on most imports and created the Import Duties Advisory Committee (IDAC), which could recommend even higher duties. Britain's protectionism in the early 1930s was shown by Lloyd and Solomou to have been productivity-enhancing. The possessions of the East India Company in India, known as British India ,

5520-701: The Exchequer from 1852, kept the progressive income tax, and extended it to cover the costs of the Crimean War . By the 1860s, the progressive tax had become a grudgingly accepted element of the United Kingdom fiscal system. The US federal government imposed the first personal income tax on August 5, 1861 , to help pay for its war effort in the American Civil War (3% of all incomes over US$ 800) (equivalent to $ 21,300 in 2023). This tax

5640-508: The First World War on motorcars; clocks and watches; musical instruments; and cinematographic film were retained. Under commodities that were early to receive protection included matches, chemicals, scientific equipment, silk, rayon, embroidery, lace, cutlery, gloves, incandescent mantles, paper, pottery, enamelled holloware, and buttons. The duties on motorcars and rayon have been determined to have expanded output considerably. Amid

5760-715: The Netherlands, Denmark, Portugal and Switzerland, and arguably Sweden and Belgium, had fully moved towards free trade prior to 1860. Economic historians see the repeal of the Corn Laws in 1846 as the decisive shift toward free trade in Britain. A 1990 study by the Harvard economic historian Jeffrey Williamson showed that the Corn Laws (which imposed restrictions and tariffs on imported grain ) substantially increased

5880-628: The Nobel Prize for Economics, argues that tariffs had no negative impact during the Great Depression. Although trade liberalization can sometimes result in large and unequally distributed losses and gains, and can, in the short run , cause significant economic dislocation of workers in import-competing sectors, free trade often lowers the costs of goods and services for both producers and consumers. A variety of policies have been used to achieve protectionist goals. These include: In

6000-634: The Republican Party into Progressives and Old Guards and led the split party to lose the 1910 congressional election. The bill also enacted a small income tax on the privilege of conducting business as a corporation, which was affirmed in the Supreme Court decision Flint v. Stone Tracy Co. (also known as the Corporation Tax case). Protectionism Protectionism , sometimes referred to as trade protectionism ,

6120-864: The US treat an entity as a corporation only if it is legally organized as a corporation. Estates and trusts are usually subject to special tax provisions. Other taxable entities are generally treated as partnerships. In the US, many kinds of entities may elect to be treated as a corporation or a partnership. Partners of partnerships are treated as having income, deductions, and credits equal to their shares of such partnership items. Separate taxes are assessed against each taxpayer meeting certain minimum criteria. Many systems allow married individuals to request joint assessment . Many systems allow controlled groups of locally organized corporations to be jointly assessed. Tax rates vary widely. Some systems impose higher rates on higher amounts of income . Tax rates schedules may vary for individuals based on marital status. In India on

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6240-424: The US, these taxes generally are imposed at a fixed rate on wages or self-employment earnings up to a maximum amount per year. The tax may be imposed on the employer, the employee, or both, at the same or different rates. Some jurisdictions also impose a tax collected from employers, to fund unemployment insurance, health care, or similar government outlays. Multiple conflicting theories have been proposed regarding

6360-513: The United Kingdom as "a decisive shift toward European free trade." This treaty was followed by numerous free trade agreements: "France and Belgium signed a treaty in 1861; a Franco-Prussian treaty was signed in 1862; Italy entered the "network of Cobden-Chevalier treaties" in 1863 (Bairoch 1989, 40); Switzerland in 1864; Sweden, Norway, Spain, the Netherlands, and the Hanseatic towns in 1865; and Austria in 1866. By 1877, less than two decades after

6480-517: The United Kingdom, and the United States, among others, follow most of the principles outlined below. Some tax systems, such as India , may have significant differences from the principles outlined below. Most references below are examples; see specific articles by jurisdiction ( e.g. , Income tax in Australia ). Individuals are often taxed at different rates than corporations. Individuals include only human beings. Tax systems in countries other than

6600-499: The United Kingdom. Europe became increasingly protectionist during the eighteenth century. Economic historians Findlay and O'Rourke write that in "the immediate aftermath of the Napoleonic Wars, European trade policies were almost universally protectionist", with the exceptions being smaller countries such as the Netherlands and Denmark. Europe increasingly liberalized its trade during the 19th century. Countries such as

6720-425: The United States into a great industrial power in the late 19th century. A review by The Economist of Irwin's 2017 book Clashing over Commerce: A History of US Trade Policy states: Political dynamics would lead people to see a link between tariffs and the economic cycle that was not there. A boom would generate enough revenue for tariffs to fall, and when the bust came pressure would build to raise them again. By

6840-481: The United States occurred under protectionist policies 1816–1848 and under moderate protectionism 1846–1861, and continued under strict protectionist policies 1861–1945. In the late 19th century, higher tariffs were introduced on the grounds that they were needed to protect American wages and to protect American farmers. Between 1824 and the 1940s, the U.S. imposed much higher average tariff rates on manufactured products than did Britain or any other European country, with

6960-562: The United States. In 2010, Paul Krugman write that China pursues a mercantilist and predatory policy, i.e., it keeps its currency undervalued to accumulate trade surpluses by using capital flow controls. The Chinese government sells renminbi and buys foreign currency to keep the renminbi low, giving the Chinese manufacturing sector a cost advantage over its competitors. China's surpluses drain US demand and slow economic recovery in other countries with which China trades. Krugman writes: “This

7080-576: The United States. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $ 5.4 billion by 1920. The amount of income collected via income tax has varied dramatically, from 1% for the lowest bracket in the early days of US income tax to taxation rates of over 90% for the highest bracket during World War II . While tax rules vary widely, certain basic principles are common to most income tax systems. Tax systems in Canada, China, Germany , Singapore ,

7200-539: The World Bank indicate that TRIPS has not led to a demonstrable acceleration of investment to low-income countries, though it may have done so for middle-income countries. Critics argue that TRIPS limits the ability of governments to introduce competition for generic producers. The TRIPS agreement allows the grant of compulsory licenses at a nation's discretion. TRIPS-plus conditions in the United States' FTAs with Australia, Jordan, Singapore and Vietnam have restricted

7320-554: The World Trade Organization , MC6, commented in 2005 that the EU spent around €70 billion per year on "trade-distorting support". Since 1971 Canada has protected producers of eggs, milk, cheese, chicken, and turkey with a system of supply management . Though prices for these foods in Canada exceed global prices, the farmers and processors have had the security of a stable market to finance their operations. Doubts about

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7440-589: The achievement of their independence, most of the Latin American countries adopted protectionism. They both feared that any foreign competition would stomp out their newly created state and believed that lack of outside resources would drive domestic production. The protectionist behavior continued up until and during the World Wars. During World War 2, Latin America had, on average, the highest tariffs in

7560-479: The admittedly high tariffs of the time came with a cost, estimated at around 0.5% of GDP in the mid-1870s. In some industries, they might have sped up development by a few years. But American growth during its protectionist period was more to do with its abundant resources and openness to people and ideas. According to Irwin, tariffs have served three primary purposes in the United States: "to raise revenue for

7680-465: The application of compulsory licenses to emergency situations, antitrust remedies, and cases of public non-commercial use. One of the most visible conflicts over TRIPS has been AIDS drugs in Africa . Despite the role that patents have played in maintaining higher drug costs for public health programs across Africa, this controversy has not led to a revision of TRIPS. Instead, an interpretive statement,

7800-466: The bill greatly angered Progressives, who began to withdraw support from President Taft. Because it increased the duty on print paper used by publishers, the publishing industry viciously criticized the President, further tarnishing his image. Although Taft met and consulted with Congress during its deliberations on the bill, critics charged that he ought to have imposed more of his own recommendations on

7920-482: The bill such as that of a slower schedule. However, unlike his predecessor ( Theodore Roosevelt ), Taft felt that the president should not dictate lawmaking and should leave Congress free to act as it saw fit. Taft signed the bill with enthusiasm on 5 August 1909, expecting it would stimulate the economy and enhance his political standing. He especially praised the provision empowering the president to raise rates on countries which discriminated against American products, and

8040-404: The capability to collect such taxes from individuals. Tariffs were the greatest source of United States federal revenue (up to 95% at times) until the federal income tax began after 1913. For well over a century the federal government was largely financed by tariffs averaging about 20% on foreign imports. At the end of the American Civil War in 1865 about 63% of Federal income was generated by

8160-487: The corporation. Deductions typically include all income-producing or business expenses including an allowance for recovery of costs of business assets. Many jurisdictions allow notional deductions for individuals and may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside the jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Nonresidents are taxed only on certain types of income from sources within

8280-399: The cost of imported goods) as well as the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries against which the protections are implemented. Protectionism has been advocated mainly by parties that hold economic nationalist positions, while economically liberal political parties generally support free trade . There

8400-443: The cost of living for British workers, and hampered the British manufacturing sector by reducing the disposable incomes that British workers could have spent on manufactured goods. The shift towards liberalization in Britain occurred in part due to "the influence of economists like David Ricardo", but also due to "the growing power of urban interests". Findlay and O'Rourke characterize 1860 Cobden Chevalier treaty between France and

8520-491: The economic historian Brian Varian found no correlation between tariffs and growth among the Australian colonies in the late nineteenth century, a time when each of the colonies had the independence to set their own tariffs. Income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income ). Income tax generally

8640-444: The economic impact of income taxes. Income taxes are widely viewed as a progressive tax (the incidence of tax increases as income increases). Some studies have suggested that an income tax does not have much effect on the numbers of hours worked. Tax avoidance strategies and loopholes tend to emerge within income tax codes. They get created when taxpayers find legal methods to avoid paying taxes. Lawmakers then attempt to close

8760-503: The exception for a period of time of Spain and Russia. Up until the end of World War II, the United States had the most protectionist economy on Earth. The Bush administration implemented tariffs on Chinese steel in 2002 ; according to a 2005 review of existing research on the tariff, all studies found that the tariffs caused more harm than gains to the US economy and employment. The Obama administration implemented tariffs on Chinese tires between 2009 and 2012 as an anti-dumping measure ;

8880-429: The excise taxes, which exceeded the 25.4% generated by tariffs. In 1915 during World War I tariffs generated only 30.1% of revenues. Since 1935 tariff income has continued to be a declining percentage of Federal tax income. A 2016 study found that "trade typically favors the poor", as they spend a greater share of their earnings on goods, as free trade reduces the costs of goods. Other research found that China's entry to

9000-486: The government, to restrict imports and protect domestic producers from foreign competition, and to reach reciprocity agreements that reduce trade barriers." From 1790 to 1860, average tariffs increased from 20 percent to 60 percent before declining again to 20 percent. From 1861 to 1933, which Irwin characterizes as the "restriction period", the average tariffs increased to 50 percent and remained at that level for several decades. From 1934 onwards, which Irwin characterizes as

9120-430: The gross amount of income of most types plus the net business income earned within the jurisdiction. Expenses incurred in a trading, business, rental, or other income producing activity are generally deductible, though there may be limitations on some types of expenses or activities. Business expenses include all manner of costs for the benefit of the activity. An allowance (as a capital allowance or depreciation deduction)

9240-416: The higher of an income tax or a tax on an alternative base or measure of income. Taxable income of taxpayers' resident in the jurisdiction is generally total income less income producing expenses and other deductions. Generally, only net gain from the sale of property, including goods held for sale, is included in income. The income of a corporation's shareholders usually includes distributions of profits from

9360-435: The history of civilization , these preconditions did not exist, and taxes were based on other factors. Taxes on wealth , social position, and ownership of the means of production (typically land and slaves ) were all common. Practices such as tithing , or an offering of first fruits , existed from ancient times, and can be regarded as a precursor of the income tax, but they lacked precision and certainly were not based on

9480-616: The income tax unconstitutional , the 10th amendment forbidding any powers not expressed in the US Constitution, and there being no power to impose any other than a direct tax by apportionment. In 1913, the Sixteenth Amendment to the United States Constitution cleared the unconstitutionality obstacle which previously had not allowed for the implementation of a federal income tax before 1913 in

9600-615: The jurisdiction is generally total income less income producing expenses and other deductions. Generally, only net gain from the sale of property, including goods held for sale, is included in income. The income of a corporation's shareholders usually includes distributions of profits from the corporation. Deductions typically include all income-producing or business expenses including an allowance for recovery of costs of business assets. Many jurisdictions allow notional deductions for individuals and may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside

9720-462: The jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Nonresidents are taxed only on certain types of income from sources within the jurisdictions, with few exceptions. The concept of taxing income is a modern innovation and presupposes several things: a money economy , reasonably accurate accounts , a common understanding of receipts, expenses and profits , and an orderly society with reliable records. For most of

9840-410: The jurisdiction. See, e.g. , the discussion of taxation by the United States of foreign persons . Residents, however, are generally subject to income tax on all worldwide income. A handful of jurisdictions (notably Singapore and Hong Kong) tax residents only on income earned in or remitted to the jurisdiction. There may arise a situation where the tax payer has to pay tax in one jurisdiction he or she

9960-399: The jurisdictions, with few exceptions. Most jurisdictions require self-assessment of the tax and require payers of some types of income to withhold tax from those payments. Advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed are generally subject to significant penalties, which may include jail-time for individuals. Taxable income of taxpayers resident in

10080-521: The late 1940s, it stifled agricultural production, exports and business sentiment, in general. Despite these shortcomings, protectionism and government credits did allow an exponential growth of the internal market: radio sales increased 600% and fridge sales grew 218%, among others. During this period Argentina's economy continued to grow, on average, but more slowly than the world as a whole or than its neighbors, Brazil and Chile. By 1950, Argentina's GDP per capita accounted fell to less than half of that of

10200-403: The liberal era of low tariffs and free trade. One study found that tariffs imposed on manufactured goods increase economic growth in developing countries, and this growth impact remains even after the tariffs are repealed. According to Dartmouth economist Douglas Irwin , "that there is a correlation between high tariffs and growth in the late nineteenth century cannot be denied. But correlation

10320-517: The loopholes with additional legislation. That leads to a vicious cycle of ever more complex avoidance strategies and legislation. The vicious cycle tends to benefit large corporations and wealthy individuals that can afford the professional fees that come with ever more sophisticated tax planning, thus challenging the notion that even a marginal income tax system can be properly called progressive. The higher costs to labour and capital imposed by income tax causes dead weight loss in an economy, being

10440-495: The loss of economic activity from people deciding not to invest capital or use time productively because of the burden that tax would impose on those activities. There is also a loss from individuals and professional advisors devoting time to tax-avoiding behaviour instead of economically productive activities. Bracket creep is usually defined as the process by which inflation pushes wages and salaries into higher tax brackets , leading to fiscal drag . However, even if there

10560-625: The member nations of the World Trade Organization (WTO). It establishes minimum standards for the regulation by national governments of different forms of intellectual property (IP) as applied to nationals of other WTO member nations. TRIPS was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) between 1989 and 1990 and is administered by the WTO. Statements by

10680-733: The modern trade arena, many other initiatives besides tariffs have been called protectionist. For example, some commentators, such as Jagdish Bhagwati , see developed countries' efforts in imposing their own labor or environmental standards as protectionism. Also, the imposition of restrictive certification procedures on imports is seen in this light. Further, others point out that free trade agreements often have protectionist provisions such as intellectual property, copyright , and patent restrictions that benefit large corporations. These provisions restrict trade in music, movies, pharmaceuticals, software, and other manufactured items to high-cost producers with quotas from low-cost producers set to zero. In

10800-460: The only question in debate should be whether duties were "unreasonably" high, was natural enough. Most people get used to existing conditions, and cannot easily conceive of anything different." The defection of insurgent Republicans from the Midwest began Taft's slippage of support. It heralded conflicts over conservation, patronage, and progressive legislation. The debate over the tariff thus split

10920-478: The opening up of New World frontiers, and the subsequent "grain invasion" of Europe, led to higher agricultural tariffs from the late 1870s onwards, which as we have seen reversed the move toward freer trade that had characterized mid-nineteenth-century Europe. In the decades after World War II, Japan's rapid rise led to trade friction with other countries. Japan's recovery was accompanied by a sharp increase in its exports of certain product categories: cotton textiles in

11040-479: The other hand there is a slab rate system, where for income below INR 2.5 lakhs per annum the tax is zero percent, for those with their income in the slab rate of INR 2,50,001 to INR 5,00,000 the tax rate is 5%. In this way the rate goes up with each slab, reaching to 30% tax rate for those with income above INR 15,00,000. Residents are generally taxed differently from non-residents. Few jurisdictions tax non-residents other than on specific types of income earned within

11160-471: The people it is intended to help. Mainstream economists instead support free trade. The principle of comparative advantage shows that the gains from free trade outweigh any losses as free trade creates more jobs than it destroys because it allows countries to specialize in the production of goods and services in which they have a comparative advantage. Protectionism results in deadweight loss ; this loss to overall welfare gives no-one any benefit, unlike in

11280-475: The post-World War II period. Alexander Hamilton , the first United States Secretary of the Treasury , was of the view, as articulated most famously in his " Report on Manufactures ", that developing an industrialized economy was impossible without protectionism because import duties are necessary to shelter domestic " infant industries " until they could achieve economies of scale . The industrial takeoff of

11400-427: The power of free trade on the eve of World War I . They believed that the interconnectedness of European nations through trade would stop a continent-wide war from breaking out, as the economic consequences would be too great. However, the assumption proved incorrect. For example, Tuchman noted that Helmuth von Moltke the Younger , when warned of such consequences, refused to even consider them in his plans, arguing he

11520-550: The provision for free trade with the Philippines. In an article for the Quarterly Journal of Economics , F. W. Taussig wrote that the congressional debates about the tariffs were "depressing for the economist. There is hardly a gleam of general reasoning of the sort which is applied in our books to questions of international trade... That there should be general acceptance of the protectionist principle, and that

11640-650: The realm. The Navigation Acts of the late 17th century required all trade to be carried in English ships, manned by English crews (this later encompassed all Britons after the Acts of Union 1707 united Scotland with England). Colonists were required to send their produce and raw materials first of all to Britain, where the surplus was then sold-on by British merchants to other colonies in the British empire or bullion-earning external markets. The colonies were forbidden to trade directly with other nations or rival empires. The goal

11760-513: The safety of bovine growth hormone , sometimes used to boost dairy production, led to hearings before the Senate of Canada , resulting in a ban in Canada. Thus, supply management of milk products is consumer protection of Canadians. Most Latin American countries gained independence in the early 19th century, with notable exceptions including Spanish Cuba and Spanish Puerto Rico . Following

11880-566: The so-called late-Victorian climacteric in the British economy: a decline in the growth rate, i.e. a deceleration. During the interwar era, Britain abandoned free trade. There was a limited erosion of free trade during the 1920s under a patchwork of legislation including the Safeguarding of Industries Act of 1921 , the Safeguarding of Industries Act of 1925 , and the Finance Act of 1925 . The McKenna Duties , which were imposed during

12000-700: The support of the Whigs in Parliament, overcoming the opposition of most of his own party. While the United Kingdom espoused a policy of free trade in the late nineteenth century, it was hardly the case that Britain was unaffected by the tariffs imposed by its trade partners--tariffs that generally increased during the late nineteenth century. According to one study, Britain's exports in 1902 would have been 57% higher, if all of Britain's trade partners also embraced free trade. The decline in overseas demand for British exports, resulting from foreign tariffs, contributed to

12120-500: The tax administration of the country or by the payer using formulas provided by the tax administration. Payees are generally required to provide to the payer or the government the information needed to make the determinations. Withholding for employees is often referred to as "pay as you earn" ( PAYE ) or "pay as you go." Income taxes of workers are often collected by employers under a withholding or pay-as-you-earn tax system. Such collections are not necessarily final amounts of tax, as

12240-543: The tax destroyed along with its repeal. Records were publicly burned by the Chancellor of the Exchequer , but copies were retained in the basement of the tax court. In the United Kingdom of Great Britain and Ireland , income tax was reintroduced by Sir Robert Peel by the Income Tax Act 1842 . Peel, as a Conservative , had opposed income tax in the 1841 general election , but a growing budget deficit required

12360-401: The tax rate applied to each additional unit of income increases (e.g., the first $ 10,000 of income taxed at 0%, the next $ 10,000 taxed at 1%, etc.). Most jurisdictions exempt local charitable organizations from tax. Income from investments may be taxed at different (generally lower) rates than other types of income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose

12480-449: The tax. Self-assessment means the taxpayer must make a computation of tax and submit it to the government. Some countries provide a pre-computed estimate to taxpayers, which the taxpayer can correct as necessary. The proportion of people who pay their income taxes in full, on time, and voluntarily (that is, without being fined or ordered to pay more by the government) is called the voluntary compliance rate . The voluntary compliance rate

12600-419: The territorial system, only local income – income from a source inside the country – is taxed. In the residential system, tax residents of the country are taxed on their worldwide (local and foreign) income, while non-residents are taxed only on their local income. In addition, a very small number of countries, notably the United States , also tax their non-resident citizens on worldwide income. Countries with

12720-408: The time that happened, the economy would be recovering, giving the impression that tariff cuts caused the crash and the reverse generated the recovery. 'Mr. Irwin' also attempts to debunk the idea that protectionism made America a great industrial power, a notion believed by some to offer lessons for developing countries today. As its share of global manufacturing powered from 23% in 1870 to 36% in 1913,

12840-522: The use of Congress and the President in future tariff considerations. Another provision allowed for free trade with the Philippines , then under American control. Congress passed the bill officially on April 9, 1909. The bill states it would "take effect the day following its passage." President Taft officially signed the bill at 5:05 pm on August 5, 1909. The Payne Act had the immediate effect of frustrating proponents of reducing tariffs. In particular,

12960-655: The value of the wages and salaries has not increased at all. The net effect is that in real terms taxes rise unless the tax rates or brackets are adjusted to compensate. Many types of income are subject to income tax, which is very variable. It all depends on the country and its tax laws. In general, countries impose taxes on income from wages, salaries, interest, dividends, and rental income. The most typical ones are wage and salary, which are almost always subject to taxation withheld by employers. Some one-time payments such as bonuses paid to employees are taxable. Dividends and interest (stocks or bonds) are usually also taxed. There

13080-572: The votes but Democrats William Jennings Bryan , Henry Watterson , and Josephus Daniels denounced them. In response the Democratic caucus imposed more discipline before the Democrats took control of the House in 1911 . An additional provision of the bill provided for the creation of a tariff board to study the problem of tariff modification in full and to collect information on the subject for

13200-411: The worker may be required to aggregate wage income with other income and/or deductions to determine actual tax. Calculation of the tax to be withheld may be done by the government or by employers based on withholding allowances or formulas. Nearly all systems require those whose proper tax is not fully settled through withholding to self-assess tax and make payments prior to or with final determination of

13320-416: The world is a difficult and somewhat subjective enterprise. Tax laws in most countries are extremely complex, and tax burden falls differently on different groups in each country and sub-national unit. Of course, services provided by governments in return for taxation also vary, making comparisons all the more difficult. Countries that tax income generally use one of two systems: territorial or residential. In

13440-414: The world", meaning that its finished goods were produced so efficiently and cheaply that they could often undersell comparable, locally manufactured goods in almost any other market. By the 1840s, the United Kingdom had adopted a free-trade policy, meaning open markets and no tariffs throughout the empire. The Corn Laws were tariffs and other trade restrictions on imported food and corn enforced in

13560-466: The world. Juan Perón erected a system of almost complete protectionism against imports, largely cutting off Argentina from the international market in the 1940s. Protectionism created a domestically oriented industry with high production costs, incapable of competing in international markets. At the same time, output of beef and grain, the country's main export goods, stagnated. The IAPI began shortchanging growers and, when world grain prices dropped in

13680-643: Was a "soldier," not an "economist." The ongoing Russo-Ukraine War began in the aftermath of the Revolution of Dignity and the signing of the European Union–Ukraine Association Agreement in 2014, which included a Deep and Comprehensive Free Trade Area for Ukraine and the European Union (EU). The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all

13800-598: Was one year of hard labor and confiscation of the entirety of a person's property. Because it caused popular discontent, this income tax was abolished in 22 CE. In the early days of the Roman Republic , public taxes consisted of modest assessments on owned wealth and property. The tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war. These modest taxes were levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth. The more

13920-467: Was positively correlated with economic and industrial growth during the 19th century. For example, GNP growth during Europe's "liberal period" in the middle of the century (where tariffs were at their lowest), averaged 1.7% per year, while industrial growth averaged 1.8% per year. However, during the protectionist era of the 1870s and 1890s, GNP growth averaged 2.6% per year, while industrial output grew at 3.8% per year, roughly twice as fast as it had during

14040-476: Was repealed and replaced by another income tax in 1862. It was only in 1894 that the first peacetime income tax was passed through the Wilson-Gorman tariff . The rate was 2% on income over $ 4000 (equivalent to $ 126,000 in 2023), which meant fewer than 10% of households would pay any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions. The US Supreme Court ruled

14160-524: Was the centrepiece of the British Empire, and because of an efficient taxation system it paid its own administrative expenses as well as the cost of the large British Indian Army . In terms of trade, India turned only a small profit for British business. However, transfers to the British government was massive: in 1801 unrequited (unpaid, or paid from Indian-collected revenue) was about 30% of British domestic savings available for capital formation in

14280-543: Was the first change in tariff laws since the Dingley Act of 1897 . Progressive Republicans wanted to lower tariffs but Conservative leader Senator Aldrich prevailed by winning over some Democrats (despite the Democratic national platform calling for lower tariffs). These Democrats represented states with industry facing imports of iron ore, lumber, hides, coal, and other items. Senator Joseph Bailey of Texas defended

14400-512: Was to maintain the North American and Caribbean colonies as dependent agricultural economies geared towards producing raw materials for export to Britain. The growth of native industry was discouraged, in order to keep the colonies dependent on the United Kingdom for their finished goods. From 1815 to 1870, the United Kingdom reaped the benefits of being the world's first modern, industrialised nation. It described itself as "the workshop of

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