Deductions authorized for individuals for subordinate personal income
Summary
Modifying Title IV in Chapter I of the Income Tax Law, regarding authorized deductions, could generate an increase in the collection of said tax in Mexico.
Allowing the taxpayers of this chapter to have the option of deducting the expenditures they make for their activities would trigger tax collection, by virtue of not requiring vouchers that meet tax requirements, they are not motivated to obtain them, for this reason, to those who buy, some of them do not register said income to be able to make the sale without such proof.
By allowing deductions, these taxpayers would demand their tax receipts and therefore those who carry out operations with them will have to find out their contributions for these operations, which in the vast majority were omitted.
Abstract
Change the Title IV in Chapter I of the Income Tax, in respect of deductions allwed, could lead to an increase in the tax collection in Mexico.
Allowing the taxpayers of this chapter have the option of deducting expenses for its activities carried out, would trigger tax revenues, by virtue of not requiring receipts to meet tax requirements, they are not motivated to obtain them do not show such income to be in a position to make the sale without such proof.
By allowing deductions, these taxpayers would demand their tax receipts and those who perform operations on them, wil have to find out their contributions to these operations that the vast majority were omitted.
Introduction
Individuals and legal entities are obliged to pay income tax in Mexico, among others, for their income regardless of the location of the source of wealth from which they come. (LISR, 2002).
This type of tax is levied on the income that people have and that is equated to a profit, however, it is a tax in which the working class pays the most, since those who make or try to make the laws are the businessmen Consequently, the laws are made with the aim that these entrepreneurs pay the least. (KIYOSAKI, 2000).
The obligation to contribute to public spending (CPEUM, 1917) through contributions in Mexico must be considered as something truly important among the society that makes it up.
Income from the provision of a subordinate personal service
In article 110 of the Income Tax Law, it is established that income from the provision of a subordinate personal service, wages and other benefits derived from an employment relationship, including the participation of workers in the profits of companies and benefits received as a result of the termination of the employment relationship.
An employment relationship, whatever the act that originates it, is understood to be the provision of a subordinate personal job to a person, through the payment of a salary. (LFT, 1970).
Therefore, it is understood that in Mexico whoever obtains an income derived from an employment relationship has the obligation to contribute with the Income Tax, and through administrative facilities, assigns the responsibility of withholding and the entire amount of this tax to the employer, except in some cases in which the amount of $ 400,000.00 is exceeded (four hundred thousand pesos per year, they have started the provision of services after January 1 of the year in question or have stopped providing services before December 1 of the year by which the calculation is made, as well as communicate in writing to the withholder that they will file an annual return (LISR, 2002).
The natural persons residing in the country who obtain income from those indicated in Title IV, to calculate their annual tax, may, in accordance with article 176 of the aforementioned law, make, in addition to the deductions authorized in said Chapter of that Law that they the following personal deductions apply, among others:
- Payments for medical and dental fees, as well as hospital expenses, made by the taxpayer for himself, for his spouse or for the person with whom he lives in concubinage and for his ascendants or descendants in a straight line, provided that said persons do not receive during the calendar year income in an amount equal to or greater than that resulting from calculating the general minimum wage of the geographic area of the high taxpayer per year Funeral expenses in the part in which they do not exceed the general minimum wage of the geographic area of the high taxpayer per year, made for the persons indicated in the preceding fraction. Donations that are not onerous or remunerative, that satisfy the requirements provided by Law.
This means that the Income Tax, where it is understood that its nature is effectively to tax income, that is, profits, in this case especially income from wages, as they are traditionally known, do not pay income tax. rent for their utility, but what corresponds to them as income.
If we review and analyze the jurisprudence theses that relate to the constitutionality of this procedure, nothing is found yet, however, the intention of the authority is clear that deductions are not considered in this area, as established in the thesis (INCOME. THE REGIME OF NATURAL PERSONS WHO RECEIVE INCOME FROM SALARIES, AND IN GENERAL FOR THE PROVISION OF A SUBORDINATED PERSONAL SERVICE, ESTABLISHED IN THE RELATIVE TAX LAW, BY NOT PROVIDING AS A DEDUCTION THE SOCIAL SECURITY FEE PAID BY, 2007) where it is clearly emphasized that this type of deductibility is not allowed in the legislation.
Cold data on employment in Mexico
In Mexico, there are according to data from the last economic census 2009 (INEGI, 2009) that show that there are 5,144,056 economic units in the country on that date.
The total employed personnel in 2008 at the national level was 20,116,834 and of these, the average remuneration per person amounted to $ 99,100.00 (ninety-nine thousand one hundred pesos 00/100 MN). (INEGI, 2009).
Change the paradigm
One of the aspects that we must address in Mexico is to adopt fiscal measures that allow us to change the paradigm in relation to taxes in the country.
In Canada, for example, whoever does not pay taxes is considered a public thief and is singled out by society, but in Mexico, whoever pays taxes is considered an abnormal person, so much so that sometimes, it is customary to recommend strategies to avoid paying taxes. the tributes that are so important to the operation of the country.
Mexico would have to double its tax collection for Moody's agency to consider the possibility of raising its credit rating, said Alberto Jones Tamayo, director of the firm in our country, in a study, that agency ranked Mexico in 14th place in tax revenue in relation to its Gross Domestic Product, which is 12%, a figure lower than the 18.2% average for the region. (Morales, 2011).
We must make important decisions in our country, which allows us to generate an adequate culture of contribution through taxes, such is the case as we find in France, there it is not necessary to deliver vouchers, discipline them and on all their culture, makes them contribute and record what they really sold.
In Mexico, we can take advantage of the area of opportunity that we have in the tax regime that is the reason for this investigation as a factor to increase the country's collection. How could this be done?
In a consultation carried out (Constantino, 2007) to people who obtain income from the provision of a subordinate personal service, 95% of them do not request proof of the expenses they make and 3.5% obtain fiscal receipts of the expenses they make, but in favor of another person.
This means that if this phenomenon in Mexico was considered as an average, taking into account the number of employed people in Mexico multiplied by the average income they obtain per year, $ 1,993,578,249,400.00 (one billion nine hundred ninety-three thousand five hundred seventy-eight million two hundred forty and nine thousand four hundred pesos, are disbursed by the workforce, in a hypothetical optimistic version, that if they made the modifications to the Income Tax Law, they would have the option of authorized deductions for people who pay taxes in the Chapter I of Title IV of the cited Law and that at least 40% of these taxpayers will take advantage of this provision, $ 797,431,299,760.00 (seven hundred ninety-seven thousand four hundred thirty-one million two hundred ninety-nine thousand seven hundred sixty pesos 00/100 MN) approximately would be included in the taxable bases of all taxpayers, which will become contributions for the benefit of Mexico.
If we use the control force that can be generated with a tax reform such as the one suggested, it will truly have a positive impact on the finances of Mexico, of course, the sector that previously omitted these revenues, will express their disagreement, however, it is time to make important decisions despite the political costs, if you truly think about the well-being of Mexicans.
conclusion
Mexico has one of the lowest collection indicators of the OECD member countries, however, we have the opportunity to modify laws in Mexico that allow increasing collection and sharing the contribution for public spending among more Mexicans, since in not all currently contribute to the country.
Modifying Chapter I of Title IV of the Income Tax Law, so that these taxpayers can have authorized deductions, will generate a multiplier effect on public policies that promote the payment of contributions, since due to the opportunity to deduct taxes, these will ask those who buy their tax receipts and those who sell, they will necessarily have to add this income in their statements that will result in the payment of a greater amount of taxes, which, strengthened with a policy of good spending, will result in having better conditions of life in the country and will avoid the financial problems that we have in Mexico by depending on non-tax revenues and reducing tax evasion rates.
Bibliography
- Constantino, EA (2007). Report on tax receipts requested by those who obtain income from wages. Tuxtla Gutiérrez, CPEUM, CP (1917). POLITICAL CONSTITUTION OF THE UNITED MEXICAN STATES CPEUM. MEXICO: OFFICIAL GAZETTE OF THE FEDERATION INEGI, IN (2009). SUMMARY OF THE RESULTS OF THE ECONOMIC CENSUSES 2009. MEXICO: INEGI.KIYOSAKI, RT (2000). RICH FATHER POOR FATHER. UNITED STATES: AGUILAR.LFT, LF (1970). FEDERAL LABOR LAW. MEXICO: OFFICIAL GAZETTE OF THE FEDERATION. LISR, EU (2002). LAW ON INCOME TAX. MEXICO: CHAMBER OF DEPUTIES OF THE CONGRESS OF THE UNION.Morales, Y. (June 15, 2011). Tax collection in Mexico. The Economist.Income. The regime of natural persons who receive income from salaries, and in general for the provision of a subordinate personal service,established in the relative tax law, by not providing as a deduction the fee. SOCIAL SECURITY PAID BY, 2a./J. 162/2007 (Second Chamber of Jurisprudence on constitutional, administrative matters. September 2007).
