Progressive personal income tax rate. What is interesting about the progressive scale of taxation. Why the state refuses money
Expert of the Center, Ph.D., Alexander Gaganov
What options for a progressive scale have been proposed by the deputies over the past 10 years? To what extent are they justified, and do they have any prospects for being accepted?
On March 26, spravedlivorossy deputies submitted to the State Duma another draft federal law on amending the Tax Code in terms of introducing a progressive scale of personal income tax (PIT).
Submission of proposals to the State Duma on the introduction of a progressive taxation scale has already become a good tradition. Such projects are introduced almost annually, and sometimes several times a year. The year 2010 became the leader, when the communists twice introduced different versions of the progressive scale and one initiative was introduced by the Just Russia. Among the factions, the primacy belongs to the communists, who more often offered to return the progressive scale.
What is a progressive scale?
The progressive scale of personal income tax is a taxation system based on the principle of increasing tax rates depending on the growth of the taxpayer's taxable income. Simply put, the more income, the greater the tax.
There are two variants of the progressive scale: a simple one, in which there is only an increasing percentage of the rate, and a complex one, in which a fixed amount of tax is paid plus a percentage of the amount exceeding the lower level of the rate.
For example, a complex progressive scale was in Russia until 2001. According to the Law of the Russian Federation dated 07.12.1991 No. 1998-1 "On personal income tax" (as amended in 1999) incomes up to 50,000 rubles were taxed at a rate of 12%. On income from 50,001 to 150,000 rubles, 6,000 rubles had to be paid in taxes and 20% on the amount exceeding 50,000 rubles. The tax on income from 150,001 rubles was 26,000 rubles. and 30% on the amount exceeding 150,000 rubles.
On the 1999 scale, the first division of the scale was income of 50,000 rubles. Is it a lot or a little? In 1999, one US dollar was worth about 28 rubles. 50,000 rubles were then equal to $ 1,785, or $ 149 per month (just over 4 thousand rubles). In April 2015, the dollar is worth exactly twice as much, so 50,000 rubles in dollar terms is half the amount.
Now Spravedlivorossi have proposed such a distribution of tax rates: incomes up to 24 million rubles inclusive (this is 2 million rubles a month, which is a lot) are taxed at 13% (as under the current system). With income from 24 million rubles to 100 million rubles, the rate rises to 25%. Income from 100 million rubles to 200 million rubles is taxed at a rate of 35%, and over 200 million rubles will be taxed for half of the income.
In its most general form, the progressive scale looks like this:
The fourth column shows the amount of income that exceeds the income indicated in the previous column: according to the Fair Russia scale, income from two hundred million rubles is taxed at a rate of 50%.
What did the deputies suggest?
As we noted above, legislators regularly try to raise taxes for the rich and lower taxes for the poor. Let's see what progressive scales they proposed, whether there are patterns in the amount of income and interest.
In the tables below, the top rows show the cutoffs for the income scale (in millions of rubles). Given that, according to the Tax Code, the tax period for personal income tax is 1 year, the scale indicates the income for the year.
The lower lines indicate the interest rates: amounts not exceeding those indicated in the upper line are taxed at this rate. If the scale is complex, then the tax rate is applied to the amount in excess of the amount specified in the previous cell in the top row. In addition, tax is paid in a fixed amount on a complex scale (not specified in the table).
Project No. 753660-6, introduced by the deputies of the Just Russia faction in 2015 (simple rate):
Project No. 550945-6, submitted by the deputies of the Just Russia faction in 2014 (simple rate):
Project No. 576534-5, submitted by the deputies of the KPRF faction in 2011 (compound rate):
Projects No. 415961-5 and No. 310805-5, introduced by the deputies of the KPRF faction in 2010 (compound rate):
Project No. 428657-5, introduced by the deputies of the Just Russia faction in 2010 (hard rate):
Project No. 391898-4, introduced by the deputies of several factions in 2007 (simple rate):
Project No. 283448-4, submitted by the deputies of the "Communist Party" faction in 2006 (compound rate):
Project No. 164989-4, introduced by the deputies of the United Russia faction in 2005 (compound rate):
Draft No. 100441-4, submitted by the deputies of the United Russia faction in 2004 (compound rate):
The scale of 1999 according to the Law of the Russian Federation dated 07.12.1991 No. 1998-1 "On personal income tax":
What do these examples of scales have in common, and are there patterns?
Some patterns are really visible. In the projects of the first years after the transition to a flat scale, one and the same tax scale is encountered: 13 (12) - 20 (18) - 30. The initial cutoffs on the income scale are also similar in value: 50-60 thousand rubles. Further, the steps of the income scale are inexplicably different.
One can also see correlations between the scales offered by the same factions: for the Just Russians in 2010 and 2015, the tax rate scale is 13 - 25 - 35 - 50, a similar scale for the communists in 2010 and 2011, 15 - 25 - 35 - 45. At the same time income scales are still different and do not show any particular regularities.
There is one more stable pattern for all projects: the lack of justification for the choice of the income scale and tax rate in the explanatory note. The deputies do not calculate how many people will pay this or that tax, nor how many taxes the state will collect when the new scale is introduced. The risks of taxpayers going into the shadows are also not taken into account. That is, the scale is chosen by the deputies almost at random.
Few projects indicate that the adoption of the bill will affect only a small part of the population (the richest). So, spravedlivorossi in an explanatory note to the draft, submitted in March this year, indicated the following: “Taking into account the specified thresholds for the application of progressive tax rates, the bill affects the minimum number of persons, but precisely those who account for a large share of the income of the able-bodied population of our country. For example, according to the data of the Federal Tax Service for Moscow in 2013, about 2,800 people declared revenues in excess of 24 million rubles a year. At the same time, the amount of their income exceeded 484 billion rubles. Including, 2,100 people received income from 24 to 100 million rubles. Their income amounted to 72 billion rubles. 347 people received income from 100 to 200 million rubles. The amount of their income is 51 billion rubles. And 320 people declared incomes exceeding 200 million rubles. The amount of income is 361 billion rubles. "
An amount of 200 million rubles a year means an income of more than half a million rubles a day. That is, they are very rich and influential people. And spravedlivorossy offered to take half of the income from such people. Without justification, why exactly half and why exactly from the amount of more than 200 million rubles. Obviously, no one wants to voluntarily part with that kind of money. And if these people are rich and influential, it is unlikely that they will have much difficulty blocking such an initiative. This is exactly what happens in practice in the State Duma: none of more than 10 such initiatives passed even the first reading.
Why does the state refuse money?
In an explanatory note to the March draft, the Spravedlivorossi noted that the Government of the Russian Federation has already instructed the Ministry of Finance and the Ministry of Labor to consider the feasibility of returning to a progressive scale of taxation of personal income (see the order of the Government of the Russian Federation of December 17, 2014 No. 2585-r, which approved “ The Action Plan of the Government of the Russian Federation for the Implementation of the General Agreement between All-Russian Associations of Trade Unions, All-Russian Associations of Employers and the Government of the Russian Federation for 2014 - 2016 "). The results of the consideration of this issue are still unknown.
However, it can be argued that if the state decides to introduce a progressive scale of taxation, then it will try not to offend the richest. In addition, the corresponding bill will be introduced not by the deputies, but by the Government of the Russian Federation. And only then will he get a real chance of acceptance.
The fact that the state is trying to take care of the rich is evidenced by a number of nuances of the existing tax system, for example, a reduced rate on income on bank deposits. State Duma deputy of the fifth convocation, communist Vladimir Ulas also cites such an example of a change in tax legislation in favor of the rich: when the law introduced “the possibility of including losses from operations with securities in tax deductions over the next 10 years (tax deduction is a part of income exempted from taxation), according to the Federal Tax Service, the wealthiest taxpayers in 2008-2009 alone removed incomes worth more than 25 trillion rubles from taxation ”.
Is there a chance of changing this model?
In 2009, at the Government's report to the State Duma, Vladimir Putin (then - Prime Minister), responding to the initiatives of the communists to return to the progressive scale, said: “We already had a differentiated rate. And what happened? Everyone paid at the minimum wage and received the difference in envelopes. Meanwhile, when we introduced a flat scale, receipts from this tax increased over eight years - forgive your attention - 12 times! The whole world envies us! I'm telling you for sure. I know what I'm talking about! "
In this context, it is obvious that a flat taxation scale is the principled position of the authorities. Even if the scale is changed, it is definitely not for the redistribution of income of the rich in favor of the poor. Rather, the middle class can be expected to suffer.
Good afternoon, dear colleagues.
The government promised that taxes would not raise taxes and the tax burden on the business world would not change. Apparently, within the framework of fulfilling this promise, a decision was made - not to increase the tax burden on business, but to start with citizens. So, a bill on the introduction of a progressive scale of personal income tax has been submitted to the State Duma: Bill No. 427315-7 "On Amendments to the Tax Code of the Russian Federation regarding the introduction of a progressive scale of the personal income tax rate." Because Individuals are taxpayers of personal income tax, it is possible that citizens will pay higher taxes. What is written in this bill?
So, from January 1, 2019, it is planned (if this bill becomes law, and it becomes law) for those citizens who receive less than 100 thousand rubles a year, personal income tax will be equal to 5%. Those Russians who will receive from 100 thousand rubles a year to 3 million rubles a year, for them the income tax will remain at the same level of 13% (more precisely 5,000 rubles + 13% from the amount exceeding 100,000 rubles).
I will comment on why not everything is so simple and joyful. Of course, normal citizens, who are more than 90%, sincerely believe that taxes should be taken from the rich, but like "I earn little, you should not take taxes from me."
Dear citizens, it is too early to rejoice. It is from you that taxes will be charged for real! The rich have not paid, and will not pay, by and large ...
The same citizens who will receive from 3 million to 10 million rubles a year will have to pay personal income tax: 382,000 rubles + 18% of the amount exceeding 3,000,000 rubles.
And the richest, those citizens who will receive a salary of over 10 million rubles a year will have to pay personal income tax: 1,642,000 rubles + 25% of the amount exceeding 10,000,000 rubles. It is they themselves, because the employer in this case is a tax agent and only collects this tax.
Colleagues, what disadvantages do I see in this bill and in this approach? It would seem that a social problem is being solved: we will take money from the rich and distribute it in favor of the poor.
It would seem, naturally, that the majority of Russian citizens would support this. But I'll show you where the "traps" are ...
The first "trap"... Imagine more or less significant inflation, and the state suddenly forgets to index the corresponding limit values (it would be beneficial for the state to forget to index the corresponding limit values). During inflation, several years pass, and due to inflation, your salary rises. Suddenly, you notice how you have moved into the category of those who pay taxes at higher rates. This is the main danger, but it is not the only one.
For example, you had a salary of 8.3 thousand rubles. Inflation. Your salary has been raised a little ... Clap! And you are already moving into the category when you pay not 5%, but 13%.
Let's say there is strong inflation. If earlier the employer paid you 25 thousand, now he needs to pay all 250 thousand. High inflation, when 250 thousand is now equal to the previous 25 thousand.
By the way, when I pointed out such a multiple increase in inflation, let us recall the very recent history of the Russian Federation. Let's remember 1992, what inflation was at that time. Let's remember 1998 ... Let's remember 2009 ... So, easily this can happen again.
Remember, at least, 2014-2015, when the dollar jumped 2.5 times. Therefore, high inflation is still possible.
In this case, it will be beneficial for the state to spin up inflation a little, without changing the figures: so that it would be possible to take more taxes from citizens and replenish the budget.
The second fundamental disadvantage. There is a law: if you encourage a person's ability to work effectively and earn a lot, then most people begin to work effectively and earn a lot. Better for the enterprise, better for the state, better for the budget. How can you improve efficiency, including by changing tax rates?
For example, I would introduce an inversely proportional scale of personal income tax. Roughly speaking, if your salary is 25 thousand rubles a month, you pay, for example, 15% of personal income tax. If your salary is 50 thousand rubles a month, you pay 10% of personal income tax. If your salary is 250 thousand rubles a month, you pay 7% of personal income tax. Do you understand?
The higher the salary, the lower the personal income tax should be, and the lower the insurance premiums should be, by and large. Why? This would encourage people to want high wages. When people get higher wages, that is in itself nice, plus there will be less taxes. In this case, we would get more productive, capable people working for the result. If we stimulate in this way ... As a matter of fact, this bill does not stimulate work ... Do you understand? And this is a big, big minus of this bill.
Third minus... There was one unshakable tax that our state did not touch for 2 decades - this is personal income tax. Vladimir Vladimirovich has always said that the flat scale of taxation will remain. And suddenly the personal income tax was affected. This is a bad sign for me. The president promised that tax rates would not change and the overall burden on the business world would not change. In fact, something else is happening.
I am afraid that this will be followed by (there are a bunch of bills) an increase in the total tax burden, which will take place in a very interesting way, in particular through non-tax regulation. For example, through the Platon system, labeling various products with identification marks (this is also a colossal tax burden on business), etc. Unfortunately, I have to admit that so far our state is following the path of levying taxes at any cost, regardless of what will happen to the economy.
Colleagues, we are preparing for the adoption of this law. Your accountants should be prepared that now personal income tax will be charged under the new rules.
At the seminar "Legalization: how to reduce taxes legally and safely", which will be held in Moscow on April 17-18, I will make a small overview of the bills that are likely to become laws in the near future. I will talk about how to pay a completely "white" salary to employees and absolutely legally reduce personal income tax and insurance premiums. After all, there is also a colossal burden on insurance premiums.
Greetings! Increasingly, the Russian media are hinting at upcoming changes in the tax code. Regional budgets are empty - they need to be filled urgently. This time the government decided to take seriously the "rich". And in a couple of years, we may be back to a progressive income tax scale. Or not?
Today we'll talk about what a unified and progressive scale of income taxation is. And we will try to figure out which system is better for Russia and why.
In modern Russia, the income tax was first introduced in April 1916 by decree of Nicholas II - at the height of the First World War. By the way, the ancestor of modern personal income tax had a progressive scale: from 7% to 12%.
Over the 100 years that have passed since that moment, the tax calculation system has been revised more than once. And for the worse and for the better for the payers.
Since 1998, Russia has had a progressive scale of taxation. What is the difference between a flat (straight, single) scale from a progressive one? The fact that in the second option the income tax rate depends on the size of the individual's income. In the late 90s, it was 12%, 20% and 30%.
In 2001, Chapter 23 of the Tax Code of the Russian Federation “Personal Income Tax” was adopted. Income tax has a new name "personal income tax". Payers were divided into two categories: residents and non-residents.
Well, and most importantly: the income tax rate has become the same for everyone - 13%. Since 2001, Russians have been giving the state a little more than one-seventh of wages and bonuses, income from the sale of real estate and cars, renting out property and dividends on shares. In general, 13% of almost all income to the family budget.
Certain types of income began to be subject to an increased rate of 35% (for example, lottery winnings). And there was a long list of incomes completely exempted from personal income tax (pensions, scholarships, alimony, benefits).
In the first two years after the abolition of the progressive scale, personal income tax revenues to the budget increased by a third! In the 2000s, the flat system became the hallmark of the Russian economy and one of the few competitive advantages of the Russian tax system.
Was the flat scale really that effective? Indeed, in other countries, it is almost never used. Not everything is so obvious.
The explosive growth in tax revenues was triggered by several factors:
- The general rate of personal income tax increased by 1% for most individuals (before that, the minimum was 12%, not 13%)
- Abolished benefits for the military, judges, prosecutors, customs officers, police and even tax officials. As a result, the number of taxpayers has grown by almost a million.
- In 2001, the tax burden in the economy was generally eased (the rates for income tax and VAT were cut). This allowed the business to redirect part of the money saved on taxes to pay salaries to employees.
- The income of the population grew every year. Russia has entered the period of "well-fed oil years"
In other words, the effectiveness of the transition from a progressive scale to a single one was greatly exaggerated.
In which countries is there a single personal income tax scale today?
Among the countries of the former USSR, the flat scale is used in Russia, Georgia, Ukraine, Latvia, Lithuania, Estonia, Kazakhstan and Kyrgyzstan. Abroad, it operates in Hungary, Bulgaria, Albania, Macedonia, Romania, Czech Republic, Mongolia, Hong Kong and the Channel Islands (Guernsey and Jersey).
A single scale of taxation is also relevant for individual federal subjects of large countries. For example, for the Canadian province of Alberta and some US states: Massachusetts, Pennsylvania, Michigan, Indiana, and Illinois.
Interesting fact. In developed countries with strong economies, the flat rate of taxation is not used!
Let's say in France the income tax rate ranges from 5.5% to 75%. The income of the French is divided into eight categories. And income is calculated not per person, but per family. And the non-taxable minimum is 6,011 euros per year.
Examples of other progressive countries include the United States, United Kingdom, Sweden, Denmark, Spain, Canada, Germany, China, and Israel.
Russia, with its 13% personal income tax, is among the top ten European countries with a minimum income tax rate. Together with Kazakhstan, Belarus, Lithuania and Bulgaria.
Is Russia returning to a progressive scale?
In fact, the direct income taxation scale is used only in poor European countries. And in almost all countries of the former USSR. Maybe that's why, in the last two years, the question of the transition to a progressive scale of personal income tax in Russia has been raised more and more often?
In August 2016, LDPR deputies submitted a sensational bill to the State Duma.
It proposes to exempt Russians with a salary of less than 180,000 rubles a year from income tax. It is recommended to leave the rate of 13% for people with an annual income of up to 2.4 million rubles. And for the "rich" they came up with a fixed tax of 289 thousand rubles plus 30% of the amount of income over 2.4 million rubles.
When will the new scale be introduced? So far, they promise that this and similar projects will be considered no earlier than the end of the 2024 elections.
Arguments against introducing a progressive taxation scale
Will Russia have a progressive personal income tax scale? The system has both pros and cons. And the cons are still outweighed.
- The population and business will begin to massively "go into the shadows" and hide their income
The validity of this argument is indirectly confirmed by the results of the tax reform of the 2000s. After the introduction of a flat scale, income from personal income tax increased by 0.7-0.8% of GDP. And many Russian businessmen and individuals, indeed, have ceased to evade taxation.
The introduction of a progressive scale can provoke the opposite process. The rich will again "hide" their income (), and the volume of budget revenues will decrease. And the main financial burden will again fall on the middle class.
- Legal and administrative costs will rise
Why? Because the population will have to independently declare their income.
Today, almost all incomes of individuals are subject to a flat rate of 13%. And tax agents (banks, brokers,) completely take over the "communication" with the tax authorities.
But the progressive scale will force Russians to independently take into account income from various sources, sum them up, fill out a tax return and submit it to the appropriate authorities.
In 2019, neither the population nor the tax authorities are ready for such activity.
- The difference between rich and poor regions will deepen
Personal income tax does not go to the federal, but to regional and local budgets. In other words, Moscow and St. Petersburg will receive even more than the impoverished Ryazan and Yaroslavl regions. Such "discrimination" is likely to exacerbate interregional tensions.
- Business distrust of the authorities will increase
Since 2001, the president and the government of the Russian Federation have promised a number of times not to change the income tax rate. Violation of promises will cause another surge in business distrust of the authorities and the outflow of private capital abroad.
The investment flow will decrease - production will decrease - the unemployment rate will jump. As a result, both rich and poor will lose.
Let me remind you that the increase in insurance premiums in 2011 was met, to put it mildly, without enthusiasm. And the introduction of a progressive personal income tax scale will only add fuel to the fire.
If not a progressive scale, then what?
No one argues that the system for calculating personal income tax in Russia needs to be improved. But it is not at all necessary to change the flat scale to a progressive one!
Experts suggest other softer options. One of them: to increase the share of tax deductions in the taxable income of individuals.
The essence of tax deductions is fair and obvious. Each of us has daily needs that need to be met - otherwise we will not survive. And the state should not "tax" that part of the income that goes to maintain a normal standard of living.
All that remains "from above" is the economic benefit of the taxpayer. Which can and should be taxed. Without tax deductions, income tax becomes a “poor man's tax”.
Let's consider a conditional example. Misha earns 10,000 rubles a month, and Oleg - 100,000 rubles. Hypothetically, for 10,000 rubles you can eat, dress in second-hand clothes, buy budget household chemicals for your home and pay for a tiny apartment and the Internet.
That is, 10,000 rubles is the minimum amount to support life for both Misha and Oleg. But the first spends all his income on current needs, while the second still has 90,000 savings and.
"To be honest" Misha does not have to pay personal income tax at all. What kind of income are we talking about if he spends everything that he earns on essential goods? But it is fair to tax Oleg's "extra" 90,000 rubles - this is a pure economic benefit.
In Russia, however, tax deductions are, in fact, equated to benefits. Liquidators of the consequences of the Chernobyl disaster, participants in the Second World War, heroes of the USSR and the Russian Federation have the right to NV. By the way, the size of tax deductions is terrifying: from 500 to 3000 rubles!
Why not increase the tax deduction to an adequate value? Then it would be possible to deduct NV from the income of an individual and tax the difference at an increased rate. This approach is much fairer and more uniform and progressive scale of income tax.
How do you feel about a possible revision of the personal income tax scale in Russia?
Today, the interest of most entrepreneurs is riveted to a proportional, regressive and progressive taxation system. There is a constant debate about what is better and under what conditions you can pay less taxes. There are many supporters and opponents of the progressive scale of personal income tax, so let's try to understand all the pros and cons of this system in comparison with the proportional taxation system. Which is better?
Proportional formation of personal income tax
This system implies a single tax base for all. This means that regardless of income, a private entrepreneur will pay a fixed contribution of 13%. Accordingly, whether he is the director of a major retail chain, who receives about 1 million rubles a month, or a loader with a salary of 10 thousand, he must pay the same percentage.
Of course, this system seems unfair to most public figures, because in this case it turns out that a person with lower earnings is forced to pay as much as millionaires. Therefore, today there are more and more supporters of a different, progressive scale of personal income tax. Is such a system really more beneficial? Let's consider it in more detail.
Progressive scale of personal income tax
If the proportional system implies a single rate for all businessmen, regardless of their income, then this scale assumes changes in the amount of taxation for residents, depending on how much the business actually brings to its owner. Accordingly, the more a person earns, the more he must pay taxes.
However, it should be said that the progressive scale of personal income tax in 2017 is not yet accepted and accessible to taxpayers. To date, the bill No. 1148107 is only pending. And if it is adopted, it will enter into force only in 2018, since now the country is still in an economic crisis, which does not allow immediately moving to a new level of taxation.
If we compare with other countries, then, for example, in Sweden, the owner of a private business is completely exempted from taxes if his income is minimal. Only excess profits (above average wages) are taxed.
The progressive scale of personal income tax, which may soon appear in Russia, works according to the same system. This means that if a resident earned 180 thousand rubles in a year, then the tax on this amount will be 0%. If the amount is from 180 thousand to 2.4 million rubles, then annually it will be necessary to contribute 13% to the treasury. With an income of up to 100 million rubles, you will have to pay 30% and so on, depending on the level of profit. The largest percentage, equal to 70%, will be paid by business owners who receive more than 100 million rubles each year.
It is also worth mentioning that the bill on the progressive scale of personal income tax had already been adopted earlier and was in force until 2001. Later, the President of Russia decided to switch to a "flat" taxation system, which implied a single percentage for all (13%). Perhaps this decision may seem like a "step back", but only thanks to this was it possible to increase tax collection, which led to a faster withdrawal of the country from the crisis.
However, the possibility of introducing a more "fair" taxation system is still questionable due to many factors. Therefore, we will consider the pros and cons of a progressive personal income tax scale that can be expected.
What do the opponents of the new taxation system think?
If we leave aside the moral aspect, which concerns what is more fair when a person with a higher income pays more taxes, and turn to dry facts.
The fact is that the introduction of a progressive scale of personal income tax, although it can help to equalize the social status of citizens, but at the same time, it can lead to a decrease in real incomes that will be distributed by the population. On this basis, for the "rich to pay more" taxes for the middle class will have to be significantly increased. Accordingly, this system may even lead to a lowering of the poverty threshold, since economic growth will be reduced.
If you impose high taxes exclusively on those entrepreneurs who earn a lot, then you will not be able to collect the necessary profit in the treasury. This is due to the fact that most wealthy citizens use optimized schemes and withdraw their finances through offshore companies. Thus, there will be no choice and will have to increase taxes for individuals and force them to declare their income.
Benefits of a progressive taxation system
If the proportional scale of personal income tax is left in the country, this will lead to the fact that the poor will always become poorer, and the standard of living of the rich population will only increase.
Therefore, a progressive taxation system is the only possible tool in order to smooth out the existing differentiation. This opinion cannot be ignored, so there is a high probability that this system will still be adopted, as in many other countries.
In this case, with a minimum income, the owner of a small business will be exempted from taxes, which will help him develop faster. Thus, more companies will appear in the country that will receive large incomes in the future, and, accordingly, more and more funds will flow to the state treasury.
Today, most aspiring businessmen are afraid to start organizations just for fear of high tax rates. If at first they do not have to pay interest, then the number of new individual entrepreneurs or LLCs will constantly grow.
Past experience
The proportional taxation system is nothing new. Before the transition to a "flat" scale of personal income tax, the number of tax collections was much higher (about 54), after 2001, when a general income tax of 13% was introduced, there were only 15 of them. Thus, with "fair" taxation, people had to pay more additional contributions. This was supposed to help the country's economy. However, most of the taxpayers concealed their income and the treasury did not receive anything.
Initially, the idea of proportional taxation was that if the percentage is less, then it makes no sense for citizens to hide income. However, based on practice, it turned out the opposite. And only the "flat" scale of personal income tax helped to overcome the crisis.
Regressive system
This type of taxation never found support in Russia. The essence of this system is that an increase in the entrepreneur's income leads to a decrease in tax rates. This type of personal income tax can lead to even greater social inequality, so it has few supporters.
However, there are those who propose introducing a progressive-regressive scale of personal income tax in order to smooth out the possible spread of social status of citizens. But today we are not even talking about the appearance of this system in our country.
Finally
Of course, the proportional taxation system looks like a way to equalize the social status of citizens. However, we must not forget that the general level of the economy also depends on this. Therefore, it will not be possible to introduce this personal income tax scale quickly.
What do they mean when they talk about a progressive tax system? In rare cases, it refers to an advanced taxation system adopted in a particular country or proposed for introduction, and which can be considered as a model for the further development of tax systems. As a rule, however, a progressive system assumes only a special procedure for calculating taxes and fees, namely, an increase in the tax burden as the taxable base increases.
The progressive tax rate is ...
Progressive taxation is based on the principle that the higher the taxable income, the higher the tax rate it should be.
Accordingly, a progressive tax rate is a tax rate that increases as the taxable base increases.
For example, before the entry into force from 01.01.2001 Ch. 23 "Tax on personal income" of the Tax Code of the Russian Federation, the issues of calculating and paying tax on income of individuals were regulated by the Law of the Russian Federation dated 07.12.1991 No. 1998-1 "On personal income tax". The specified Law provided for the withholding of personal income tax using a progressive rate. So, Art. 6 of the last effective version of the said Law provided for the following rates of personal income tax:
Progressive taxation in Russia
In Russia, the question of returning to a progressive scale of taxation of personal income periodically arises. The need to introduce a progressive rate is explained by the need to replenish the revenue side of the budget. Opponents talk about the risk of income going into the shadows.
In any case, the Main Directions of the Tax Policy of the Russian Federation for 2016 and the planning period of 2017 and 2018 do not provide for the introduction in the near future of a progressive tax rate for personal income (Letter of the Ministry of Finance dated 25.01.2016 No. 03-04-05 / 2540).
Elements of progressive taxation can be seen, for example, in the transport tax, according to which the tax rate increases as the physical indicator of the taxable object increases (for example, as the engine power increases). But this is not pure progressive taxation. The progressive rate should provide for an increase in the tax burden with an increase in indicators for the same object.
In general, progressive taxation is not applied in the Russian Federation. And for certain types of compulsory payments to the budget, even regressive rates are more likely to be seen. For example, insurance premiums for compulsory pension insurance in 2017 are generally calculated at a rate of 22%, and from the amount of taxable payments that exceeds 876,000 rubles, insurance premiums are calculated at a rate of 10% (
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