Academic journal article Academy of Educational Leadership Journal

Innovative Tax Policy Projects Utilizing a Global Perspective

Academic journal article Academy of Educational Leadership Journal

Innovative Tax Policy Projects Utilizing a Global Perspective

Article excerpt


Many university courses taught today have attempted to develop an "international flavor". Recruiters often suggest that students consider an International Business minor or at least take several courses that reflect this concept. With this in mind, the author attempted to develop a project for his taxation classes, which emphasized a comparison of foreign tax systems with the current U.S. structure. The strategy was to use the Internet as a research tool in order to accumulate information related to a number of tax policies and have the students evaluate the fairness of each of these various systems. In an effort to improve teamwork skills, the project was developed using a group presentation approach.

The author refers to this assignment as his "Adam Smith" research project. It has been used successfully during the past three years in a number of taxation classes. The emphasis of this project involves a review of the tax policy currently used in the United States compared with foreign countries in hopes of determining what features appear to be most beneficial to the stakeholders involved. In other words, what tax system principles, characteristics, and requirements would be most advantageous for both the government and the majority of the country's citizens? Students often have very strong beliefs on this subject that they freely share which creates excellent classroom discussions. By encouraging students to evaluate three different tax systems, they begin to discover significant equity and fairness differences.

The project begins with the introduction by the instructor of Adam Smith's "Canons of Taxation". A review of this famous set of criteria for good tax policy serves as the foundation for the assignment. In his book "The Wealth of Nations", Smith presented four basic characteristics of a good taxation system (Smith, 1776). His canons of equality, convenience, certainty, and economy provide the students with a benchmark for an "ideal" taxation system.

Smith believed that taxpayers should contribute to the system in proportion to the revenue that they enjoyed. This led the United States to adopt as one of its major tax principles the concept of "ability to pay". Smith also felt that both the amount and time of payment of tax should be specific and easily determined by the citizens of the country. In addition, he felt that the tax should be levied at the time when it was most convenient for the taxpayer to pay it. Finally, Smith believed that the government should take as little as possible from the taxpayers over what was brought into the treasury. In other words, the tax should be economical to assess and collect. These four canons provide valuable principles for the development and operation of any tax system and are used by students during their evaluation of alternative tax structures.

The author also reviews with the students several statements by Wilbur Mills, long time chairman of the House Ways and Means Committee, which reflect Smith's beliefs. Mills felt that tax reform should seek for greater reliance on the principle that equal incomes should bear equal tax liabilities (equality). He also felt that the tax system should interfere as little as possible with the operation of the free market mechanism in directing resources into their most productive uses. In addition, Mills believed that our tax system should have greater ease of compliance and administration in order to provide economy (Mills, 1959). The use of the Smith/Mills philosophy provides an excellent conceptual introduction to students prior to the assignment of this group research project. It provides them with some important historical literature concerning the principles of a good tax system.


With Adam Smith's principles in mind, the author developed a group project that attempted to encourage student teams of two members (three if necessary) to construct a tax system that is as close to an "ideal" system as possible. …

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