Analysis of the Turkish income tax schedules with respect to rational taxation

ABSTRACT As one of the most important elements of taxation, the efficiency of income tax schedule to rational taxation is of vital importance to reach success on the parito of taxation. This thesis, first of all, identifies those basic principles of income tax schedule theory within rational taxation, reviewing the advancements in practice concerning income tax schedule. Analysis of the Turkish income tax schedule applied between years of 1950 and 2001 with respect to rational taxation, identification of the problems of tax schedules and solutions to such problems, and also constituting an income tax schedule based upon a fair, efficient, and effective structure exist among the purposes of this study. Wiht such a purpose, Turkish income tax shedule between 1950 and 2001 years were classified in relation to their historic development, and they were later comparatively analysed on the bases of their criterias. These schedules were further analysed as to bracket as fixed price, marginal rates, and average rates and progressivity degree, and they were also evaluated with respect to their economic effects. The data findings show that Turkish income tax schedule in various periods had such a structure far from rational taxation. The schedules violated such tax principles as legality, simplicity, equity, efficiency, and stability. Those progressivity schedules proposed and applied with respect to their effectiveness to regulate income distribution were seen to be far from achieving this and with its structure and application in the Turkish context. Even worse than that they had a structuree spoiling the income distribution. This case justifies the criticism that progressivitiy theory is the source of arbitrariness. There is not a single income tax schedule relevant to rational taxation, yet any schedule suitable to rational taxation should inherit principles conforming to different approaches. This study, therefore, identifies those principles in relation to developments both in theory and practice, and offers a set of proposals cencerning rational income tax schedule. Vll