Structural Flaws of Income as a Base for Taxation

Centre for Accountancy, Governance and Taxation Research Working Paper No. 6

24 Pages Posted: 25 Jun 2010 Last revised: 8 Apr 2015

See all articles by John Prebble KC

John Prebble KC

Victoria University of Wellington, Te Herenga Waka - Faculty of Law; Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien; University of Notre Dame Australia - School of Law

Date Written: 2001

Abstract

This article discusses Ross Parsons’s influential Wilfred Fullagar Lecture “Income Taxation – an Institution in Decay” (1986) 3 Australian Tax Forum 233, in which Parsons opined that the considerable analytical shortcomings of the concept of income stem from income tax adopting the concept of income from the law of trusts, which is based on principles that are different from and irrelevant to the policies and imperatives of income tax law. An exploration of the history of income tax shows that the origin of the judicial concept of income as a tax base in fact stems from the income tax of 1799, which inherited the concept of income as a regular flow that is measured annually. However, the author agrees that the concept of income is fundamentally flawed. The ectopia of tax law comes about because tax law generally taxes the results of legal transactions rather than their underlying economic effects. Furthermore, the law must make a number of assumptions that are not in fact correct, which removes the base that the law taxes even further from the economic reality of the case.

Keywords: Income Tax, Ross Parsons, Ectopia, Legal Fictions, Tax Value

JEL Classification: K34

Suggested Citation

Prebble KC, John, Structural Flaws of Income as a Base for Taxation (2001). Centre for Accountancy, Governance and Taxation Research Working Paper No. 6, Available at SSRN: https://ssrn.com/abstract=1604947 or http://dx.doi.org/10.2139/ssrn.1604947

John Prebble KC (Contact Author)

Victoria University of Wellington, Te Herenga Waka - Faculty of Law ( email )

PO Box 600
Wellington, 6140
New Zealand
+64 4 463 6311 (Phone)
Papers Indexed at HOME PAGE (Fax)

HOME PAGE: http://www.victoria.ac.nz/law/staff/prebble-scholarly.aspx

Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

University of Notre Dame Australia - School of Law

Sydney Campus, New South Wales
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
130
Abstract Views
1,076
Rank
395,220
PlumX Metrics