Using Human Capital Theory to Establish a Potential Income Tax

Dagney Faulk, Jorge Martinez-Vazquez () and Sally Wallace

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: There are good arguments for an individual income tax on “potential income”, but the drawback to such a tax is the significant administrative concern regarding the implementation of the tax. This paper argues that human capital theory provides a widely accepted and straightforward method to estimate “potential income” using observed characteristics of individuals, and operationalizes this approach using data for the U.S.A. The paper also suggests that a “potential income tax” is very similar to a “presumptive income tax.” The paper concludes by reviewing some significant problems with the implementation of a potential/presumptive income tax.

Keywords: Human Capital; Potential Income Tax; presumptive income tax (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-06-01
New Economics Papers: this item is included in nep-hrm, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://icepp.gsu.edu/files/2015/03/ispwp0710.pdf (application/pdf)

Related works:
Journal Article: Using Human-Capital Theory to Establish a Potential-Income Tax (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper0710

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