- I don't see how it's more private than publishing income?
- I don't see how knowledge of gross and taxable income or tax rate allow to deduce tax avoidance?
- I'm afraid publishing this information may hurt general society "climate" more than it helps.
Privacy compared to publishing income
published the percentage rate of tax that each citizen paid?
i.e. taking the gross income before deductions and the tax paid and turning that in to a percentage.
I don't really see where the big difference between publishing taxable income vs. publishing effective tax rate is in terms of privacy?
Here in Germany, the effective tax rate is a strictly monotonous function of taxable income (https://de.wikipedia.org/wiki/Einkommensteuer_(Deutschland)#/media/File:ESt_D_Splitting_2018_zvE_bis_120000.svg), with 2 exceptions:
- taxable income so small that it is in the 0 tax zone and
- capital gains are mostly handled separately from other types of income, and with a constant tax rate, so for that part, you cannot conclude much from the tax rate.
(There are again exceptions from the exception ... here it's getting quite complicated, because also the company where the capital is invested pays something like income tax before dividends are paid out...)
So, publishing effective tax rate (as in taxes : taxable income) leaves the reader to guess a bit about the size of capital gains vs. other sources of income, but is almost as good as publishing taxable income in terms of information content.
Personally, I'm very much in favor of privacy rights (along the line that I behave well and in concequence expect privacy), and in my culture personal income and/or wealth are considered private. From that perspective, I do see a huge difference between a (or few) tax officer(s) who took an oath that they will obey all laws and will be scrupulously correct in administering their duties knowing details of my financial situation in order to calculate my taxes and random persons getting this knowledge. (more below in section "Does it help").
But that's certainly a political opinion and as such open to discussion.
Does tax rate or tax payed to gross before deductions help detecting tax avoidance/loopholes?
It strikes me that this approach would help to highlight tax avoidance without giving away too much personal information.
I don't see how?
As for not giving away too much personal information, see above.
As I understand tax avoidance, it happens via deductions that are legal but reduce the taxable income in a way that was not envisioned when the respective tax law was made (loophole). So all that distinguishes them from normal deductions is that they were not intended for the situation where they are employed.
Which means in turn that detecting a loophole needs sufficient information to distinguish whether a deduction is used as intended or not. This is impossible without knowing what exactly is deducted. In other words, far more detailed information than tax ratio or taxes paid to income before deductions is needed.
Even the tax office may not be able to detect this loophone immediately but they look for unusual patterns and routinely request further documentation (or discard deductions) - which would allow them to detect the loophole.
The ratio of tax to income before deductions proposed in the question is not very informative without additional information. Consider the following situations without tax avoidance:
- a) a web developer employed somewhere around the corner: hardly any deductions but mostly mandatory social insurance: high tax to income before deduction ratio (and that is ≈ tax rate)
- b) a self-employed web developer working from home: hardly any deductions but social insurance which is more variable and higher than in case a): somewhat lower tax to income before deduction ratio
- c) a farmer, tradesman or shop owner: far higher income before deductions (sales), but also high deductions buying material/wares and writing off machinery
As a rule of thumb, IIRC, local shops often have a margin in the lower single-digit percentages of sales. This would put the tax to income before deduction ratio close to zero.
- d) in my region, part-time farmers are quite common. Or think what happens if the web-designer a) or b) starts a small online shop from home (using the services of a logistic company like amazon: that would not even require a garage for storage). We get a tax to income before deduction ratio anywhere between a) and 0, all is as intended and (in contrast to the CEO in the comment the difference between web-developers a) or b) vs. d) is hardly visible to the public.
In the end, even with publishing income before deductions and tax rate, the legal and plausible range will be so wide that I don't see how good conclusions can be drawn.
Moreover, I don't see how any conclusions would be possible for this tax to income before deduction rate (or effective tax rate) that the tax office couldn't draw far more easily as they have far more information at hand and the right (and duty) to ask for more documentation in case anything is not clear.