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Technique of Taxation

The essence of the Institute’s proposal reduces to this. The growth of production, and on the basis of that, the rise in productivity of labor, is forecast by the social plan. (The assumption is that official forecasts will be morę accurate than until now. On the basis of what was presented above, that assumption seems realistic to me.) Econo-metric analysis shows how much personal incomes can rise so that, along with a given productivity of labor, prices remain stable. So that precisely that much, and not a greater rise in incomes occurs, it is ne-cessary to destimulate increases above the standard determined by the social plan by progressive tarcation. In some enterprises the rise will be greater and in some less. Nobody is ordered to do anything. Ali that is necessary to achieve is that on the average the rise in personal incomes corresponds to the increase in productivity of labor.

The source of inflation is not only in the rise of personal incomes but in the already attained level of personal incomes in privileged industries because of which there appears a so-called demonstration effect. Therefore in addition to the rise of personal incomes an above-standard level of personal incomes should be taxed. Possibly the ac-tual average of personal incomes in the country can be taken as the standard. Taxation of the surplus of income above the given standard corresponds to the classical principle of taxation according to the economic strength of the taxed subject. It can be added that it is completely elear that this tax greatly affect privileged industries and that they will offer bitter resistance. It would therefore be wise to apply mild rates at the beginnig and to make the progression stceper once the process of equalizing distribution has begun.

Since work is heterogeneous, the simple statistical average incomes cannot represent the tax base. Abstractly speaking. the best solution would probably be if average personal incomes were calculated for each profession and the tax divided up on that basis. But that would probably be too expensive a procedurę. It is simplest to group emp-loyees in a certain number of qualification categories - which is any-way done traditionally in this country - and to thus calculate average incomes and tax bases on the basis of qualifications. To stimulate research and development work it would be useful to added the master’s degree and doctorate as separate qua!ification groups. Further simplification consists in linking qualifications with formal school preparation. B. Marendić’s research shows that our economy behaves precisely like that, that is that on the average personal incomes are determined according to school preparation. It is in the naturę of the problem that the determination of classifications has to be carried out uniformly for the entire country, and therefore this task cannot be

left to work collectives themselves.

Accordingly the entire procedurę would technically appear thus. those employed in an enterprise would be divided into 8 qualification groups: unskilled and without school preparation, semi-skilled and lower school preparation, skilled and incomplete secondary education, highly skilled and completed secondary education, post-secondary schooling, higher education, master and doctorate. The increase o

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