The Use of Tax as Tax Incentive and as a Distribution Instrument Or Income Concentrator

In modern tax systems, taxation is exercised not only as a means by which the State meets its most pressing needs for financial resources but also as a means of stimulating economic behavior. In other words, the tax system can act as a collecting tool, stimulating economic procedures or locations (through tax incentives) and, finally, as a means of sharing or concentrating wealth.

The tax instruments used as means of the collection will not be examined in this article. Here we will discuss the possibility of the tax while apt to be used as a tax incentive and as a distribution instrument or income concentrator. The Federal Constitution in force, within the discrimination of incomes that it makes, says that it is for the Union to tax "income and profits of any nature."

The income tax has its effective origin in the Regulation Sousa Reis, of 1926, although it can be affirmed that sparse attempts were previously made. It can be said that the current income tax has its remote origin in the tax on allowances and salaries created in 1844, suppressed in 1845, recreated in 1879 and again suppressed in 1918. Another possibility of resemblance would be the tax created in 1867, which fell on dividends and profits "earned by banking institutions." However, if there was already a collection of tribute that could be considered as an incident on the income - such as income and dividends - this fact did not prevent occasional attempts to implement the tax in a clear and institutional way.

"The collection of this tax presents some difficulties, especially in principle, but in some nations the good faith of the taxpayers reduces to a large extent this inconvenience and the good faith of the people's illustration of the necessity of the tax and of their good job, which is to be like seed thrown on fertile ground. Maybe that among us not only the good faith of some but also the ruin of others make the collection easy and productive. That confessing that he is poor. The collection will, in any case, be difficult in the beginning, but then it will improve, and in the end, it will become as perfect as possible. "From the Federal Constitution of 1934, when the tribute in question was first recorded in the Federal Constitution of 1934 until Constitutional Amendment No. 1 of 1969, the major change occurred was the exclusion from the scope of "allowances and expenses" paid by the public coffers by the law.

"However, the introduction of income tax should not be attributed to the creativity of our patricians among the taxes contained in the Federal Constitution. It can be said that it has its origin in England when, in 1799, Pitt, in order to meet the growing expenses with the Napoleonic war, after the exhaustion of healthy sources of income, decided to find a new tax form to satisfy the expenses of the Treasury public. As the new tax, valid for a three-year period, had been voted upon and approved, the Addington Cabinet was understood to extend it for a further triennium. So did the next cabinet, led by Lord Pitt. These successive renewals ended in 1815 when the popular clamor demanded of the Vansittart Cabinet its non-proposition. With the financial reform of Robert Peel in 1824, after successive extensions, was the income tax incorporated into the British tax system. After repeated extensions, the popular repudiation diminished sensibly; so much so that in 1874, Gladstone, who had taken the overthrow of the tax as a political flag, had the discomfort of being defeated electorally. Already in the United States, by copying the English model, the tax was instituted to cope with the growing demands arising from the War of Secession.

The concept of income, however, is not one of peaceful acceptance, nor is it as simple as it intends to show the concept contained in the National Tax Code. Moreover, this is so true that the legislator felt the need to include in his definition a common ditch by mentioning as an income characteristic "the accruals not included in the previous paragraph." However, the courage of our legal diploma is praiseworthy in trying to include a definition rarely found in other legislation. Such a concept, as we know, comes from a US Supreme Court judgment, which, in judging the Stratton's Independence v. Howbert case, defined "income may be defined as the gain from the capital, from work, or from both combined.”

The difficulty encountered in adopting a peaceful definition of income stems from the disagreement in the field of public finance and economy. In short, the question that arises is: what would income be? It is only by way of note that this concern has been consistently manifested since Adam Smith, David Ricardo, Jean B. Say, and John Stuart Mill, for whom, in general, there was a link between the incomes itself, when it comes from the exploitation of the land by its owners. The present work, because it encompasses a reduced field, will stick to the analysis of the legal concept of income. Mostly, the two main currents are those that defend, one, the concept of "product income" and another, that of "income." The first, the oldest, has umbilical bonds with economic fundamentals. The second chain, already quite independent of its matrix, tries to analyze the phenomenon with only tributary instruments, considering as income any equity increase or any entry occurred. This latest trend, which is much more modern than the previous one, has been gradually gaining support, even among countries that have adopted the concept of "product income" in their legislation, since its adoption brings the possibility of taxing capital gains, donations, prizes, etc.