Lines of research

ATA is currently focusing on five lines of research.

1. The ability-to-pay principle as a leitmotiv for the reform of personal income tax in an active welfare state

When income tax legislation was reformed in 1962, legislators tried to take into account the tax-bearing capacity of the taxpayer. This ambition was particularly important in the development of the personal income tax. Since then, this tax has been levied on overall income, regardless of its nature, and the cumulative taxation of the income of spouses has been generalised.

 The legislator based the procedure on the idea that honest burden-sharing could not be achieved when taking into account the fiscal capacity of the individual alone. The family was seen as an economic unit, and the composition of the taxpayer's family was therefore taken into account when assessing his or her tax-bearing capacity. This resulted in an increase in the personal allowance and a progressive reduction based on the number of dependants. On the basis of that principle, it was deemed justifiable to introduce progressive income tax rates. Care was taken, however, to ensure that this progressive rate would not raise taxes so high that it would lead to a levelling of incomes rather than to an equitable adjustment of the tax burden to the actual tax-bearing capacity. The fact that income taxes are levied on a net income basis is also the result of the ability-to-pay principle.

Over the years, however, the Income Tax Code has changed frequently and the original idea of developing a simple tax has largely been lost. In addition, less and less is being said about the ability-to-pay principle.
This raises the question of whether, generally speaking, our current system still meets the constitutionally grounded equality principle, which can be regarded as the basis of the ability-to-pay principle. The heavy tax burden on employment income when compared to the tax burden on other forms of income is a classic example.  Despite several legal interventions the Belgian tax burden on wage earners is  still one of  the highest in the world .
Furthermore, the various changes made to the Income Tax Code since 1962 have rendered Belgian income tax hopelessly opaque and complicated, and we may well wonder which principles currently govern our income tax system.
 
Taxpayers are increasingly struggling to grasp the logic of the system. They are faced with numerous rapidly changing tax rules which lack consistency and logic and are difficult to understand. Because of this, there is a real risk that taxpayers will become increasingly alienated from the tax regime to which they are subjected. One of the consequences of this alienation is that they may find it harder and harder to understand the purpose of the substantial financial effort that is expected of them every year.

Today's income tax system has a number of fundamental shortcomings that require more thorough reform. In order to ensure that reform is based on sufficient (public) support, a thorough preparatory debate that draws on interdisciplinary fundamental research will be required. For example, we should ask again whether the original principles related to income tax (namely a simple, efficient and fair tax based on tax-bearing capacity) are still valid. If the ability-to-pay principle is no longer considered an acceptable starting point, then we must identified which other principle(s) should shape the tax. However, if the ability-to-pay principle is still accepted, then the question arises as to whether this ability should be judged on an individual basis (per taxpayer) or if legally structured forms of cohabitation should be taken into account (e.g. actual cohabitation, legal cohabitation, marriage, etc.). When using the ability-to-pay principle as a basis for taxation, we should also ask ourselves whether it is justifiable to tax different forms of income so inconsistently. Compare, for instance, the tax on income from movable assets and certain types of property income with the tax burden on employment income.

Is the assessment of tax-bearing capacity limited to the tax-bearing capacity indicated by income (regardless of its origins: labour or capital), or should we also take into account all of the taxpayer's other assets, even if they do not generate any income? When determining tax-bearing capacity, should other factors be taken into account in addition to income and/or assets (e.g. the link between tax-bearing capacity and cognitive abilities, etc.)?