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The implications of technological change for the tax system and the efficacy of tax policy

Tax policy choices and tax base design are made at a point in time.  The existing technology at the time of those decisions plays a significant role.  For example, decisions on the shape of the international corporate tax base were made in the 1930s.  Technological change can and has meant significant changes in the way transactions can occur and the potential for the management and use of data.  Such technological changes will continue to occur.  Do such changes mean that the current tax bases are more costly and less effective?  Are some of the fundamental choices made decades ago still relevant today?  For example, if the goal is to have tax based on ability to pay it could be argued that wealth was a better measure.  However, it was argued that it was easier to measure flows (income) than stocks (wealth).  It was also argued that this should be done on realisation as valuation was difficult and the cash flow was needed to pay the tax.  Do these arguments still hold or has technology fundamentally changed these calculations. What reform opportunities might technological change support?  What tax system risks and opportunities do emerging technologies pose?

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