Monetary De-measurement of taxation using cogni-economic pressure coefficient on a continuous progressivity model: towards equitable taxation for Kenya
Date
2019-08
Authors
Kiraka, Stanley
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Taxation by governments derives from subjects earnings measured in monetary terms a principle
anchored in financial accounting. The canon of equity, sometimes referred to as ability to pay
remains monetary. However, equal taxable incomes often require employment of different
economic rationality levels to earn them depending on the profession or sector the tax payer
comes from. This means that different cognitive energies are required to generate the same
taxable income disapproving the mere "ability to pay paradigm as the most equitable. Using the
Gamma Rationality measure for the credit unions sector that comprises 67% of Kenyan economic
livelihoods, a Cogni-economic Pressure Coefficient is derived, which is used to generate a more
equitable tax structure from a continuous progressivity tax model, for greater equity. A
continuous progressivity model avails Newtonian differentiability thereby revealing the income
structure of the working population. Possibility of the envisioned tax yield being greater than the
raw money-measured tax yield is also shown. Nevertheless, greater taxation equity is considered
superior to the tax yield.
Description
Paper presented at the 5th Strathmore International Mathematics Conference (SIMC 2019), 12 - 16 August 2019, Strathmore University, Nairobi, Kenya
Keywords
Cogni-economic Pressure Coefficient, Garn-Ina rationality measure, Psycho-social economic equation, Entrepreneurial rationality threshold, Income consumption rationality function