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Background note
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Reference no. 221-0036-5
Published by: Blavatnik School of Government, University of Oxford
Originally published in: 2019
Version: 14 February 2019
Notes: For terms & conditions go to www.thecasecentre.org/freecaseterms

Abstract

In the forty years to 2019, the level and sources of taxes in OECD countries had remained roughly constant. However, this apparent stability had concealed serious threats to the nature of public finance. First, public expenditures had grown over that same period, particularly following the 2008-09 global financial crisis. Second, traditional sources of taxation, namely taxes on labour income and consumption, which together accounted for about 85% of tax revenue, were coming under threat by a number of emerging technological and social phenomena, including advancements in job-replacing automation; a growing gig economy; greater cross-border e-Commerce; an ageing population; and an increasing concentration of wealth. All of these changes suggested the need for a fundamental redesign of the tax system. This note, written for non-tax experts, explores how these phenomena challenge the legacy approaches used to tax labour and capital. It discusses ways to rethink tax systems for the 2020s and beyond, with a particular look at two bold, yet controversial, new policy ideas: an automation tax and a tax on global wealth. This background note has been made available free of charge.

Teaching and learning

This item is suitable for postgraduate courses.

Time period

The events covered by this case took place in 2019-2020s.

Geographical setting

Region:
World/global

About

Abstract

In the forty years to 2019, the level and sources of taxes in OECD countries had remained roughly constant. However, this apparent stability had concealed serious threats to the nature of public finance. First, public expenditures had grown over that same period, particularly following the 2008-09 global financial crisis. Second, traditional sources of taxation, namely taxes on labour income and consumption, which together accounted for about 85% of tax revenue, were coming under threat by a number of emerging technological and social phenomena, including advancements in job-replacing automation; a growing gig economy; greater cross-border e-Commerce; an ageing population; and an increasing concentration of wealth. All of these changes suggested the need for a fundamental redesign of the tax system. This note, written for non-tax experts, explores how these phenomena challenge the legacy approaches used to tax labour and capital. It discusses ways to rethink tax systems for the 2020s and beyond, with a particular look at two bold, yet controversial, new policy ideas: an automation tax and a tax on global wealth. This background note has been made available free of charge.

Teaching and learning

This item is suitable for postgraduate courses.

Settings

Time period

The events covered by this case took place in 2019-2020s.

Geographical setting

Region:
World/global

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