Introduction to Taxation - 1687 Words

INTRODUCTION TO TAXATION Unlike most transfers, which are voluntary, taxation is compulsory. That’s needed because of free-rider problem (no one will have injective to contribute) Modern taxes are monetized (individuals provide just money) Tariffs are taxes imposed on imported goods. Tariffs protect domestic producers. Taxes can be divided to: †¢ direct †¢ indirect Direct taxes are individual income tax, payroll tax (used to finance social) security, corporation income tax (tax on net profit of corporations), tax on property. Indirect taxes are custom duties on imported goods from abroad, exice taxes (telephone services, air travel, luxury commodities). VAT (Value-added tax) are taxes on the difference of†¦show more content†¦With a perfectly elastical supply curve, the prices rises by the full amount of tax, entire tax burden is on a consumer. With perfeclty inelastic demand price rises by full amount of the tax and the entire burden is on consumers. OPTIMAL TAXATION Fallacies of optimal taxation : 1. We should have a tax on wage income. Additional taxes just increase distortions and economic inneficiency. 2. Theory of the second best is the design of government policy in situations where the economy is characterized by some important distortion that can’t be removed. Optimal tax structure is a set of taxes which maximizes social welfare. If all individuals were identical and were treated for tax purposes identicly, a lump-sum tax would be the only efficent tax. The choice facing the government is to either have a uniform lump-sum tax (individual pays tax regardless of what they do or what abilites they have) or tax that depends on easily measured variables (expenditure or income) Progressive taxes are reducing deadweight loss. Elasticily optimits – distortions are low. Elasticly pessimists – Distortions are large. Flat rate taxes are taxes where the marginal tax rate (the extra tax individual pays for an extra dollar of income) is constant for both tax systems. Progressive tax – the ratio of the total tax payments to the individuals income, increases with income. MoreShow MoreRelatedChapter 1 Introduction to Federal Taxation and Understanding the Federal Tax Law1861 Words   |  8 Pages543 Chapter 1 Introduction to Federal Taxation and Understanding the Federal Tax Law TRUE-FALSE QUESTIONS—CHAPTER 1 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. The majority of dollars collected by the U.S. government come by way of corporate taxation. Prior to the Sixteenth Amendment direct taxes were illegal. All U.S. taxes are based on an individual’s income. Customs taxes are imposed on exports toRead MoreThe Philosophy Of Tax Reform1191 Words   |  5 Pagesexcept taxes on the supply of petroleum products and alcohol†­Ã¢â‚¬ Ã¢â‚¬ ¬.†­ †¬The basis of GST is value addition.†­ †¬It is comprehensive indirect tax levied on manufacture and sale of goods and services at a national level.†­ †¬Integration of goods and services taxation would give India a world class tax system and improve tax collections.†­ †¬It would lead to†­ †¬the abolition of†­ †¬many other†­ †¬taxes such as octroi,†­ †¬sales taxes,†­ †¬entry tax and eliminate the cascading effects.†­ GST proposes to introduce a singleRead MoreShould The Uk Government Restore The 50 % Additional Rate Of Income Tax? Essay1381 Words   |  6 Pagestaxed nations across the globe despite impaired competitiveness and stifled economic growth. Unlike most OECD countries that have lessened their tax burdens since 1997, UK taxation has increased, which has resulted in reduced competitiveness of the country’s position as a low tax regime. The other characteristics of UK taxation include forcing taxpayers into higher rate tax bands, which enforces higher tax rates for more people. However, in the past few years, there have been debates and controversiesRead MoreThe Impact Of Tax Structure Of The United Arab Emirates945 Words   |  4 PagesCurrently, the United Arab Emirates does not have a federal corporate income tax (CIT) regime; however, most of the Emirates introduced income tax decrees in the late 1960s, and taxation is therefore determined on an Emirate-by-Emirate basis. Under the Emirate-based tax decrees, CIT may be imposed on all companies (including branches and permanent establishments [PEs]) at rates of up to 55%. However, in practice, CIT is currently only enforced in respect of corporate entities engaged in the productionRead MoreThe Issues of Taxation1409 Words   |  6 PagesIntroduction Tax is any kind of requirement in the form of money or asset that is expected of an individual or a business entity by the governing authority. There are various types of taxations such as capital tax, individual tax and income tax among others (Simontacchi, 2007). The taxation issue has been a thorn to businesses and their owners, especially those who do international trade. This has affected the international businesses very much. As a result, the governments of those nations thatRead MoreEssay about Double Taxation1718 Words   |  7 PagesIntroduction Double taxation arises when an individual or business acquiring income in a foreign country is required to pay taxes on that income in both the foreign country as well as the country of origin. For example, an American company operating in a developing country, in the absence of a tax treaty between the two countries may have to pay a withholding tax to the government of the developing country, as well as corporation tax to the United States government (Howard, 2001, p. 259). TheRead MoreImpact of Carbon Taxation on Passengers of Aviation Industry1017 Words   |  4 PagesCarbon Taxation Its Impact on Passengers of Aviation Industry Introduction Introduction of Carbon taxation by European Union stirred disturbance in the aviation industry Airlines bear it or pass the effect on the customer 2 Rationale Behind Taxation Airlines use fossil fuels responsible for the emission of: Carbon compounds Green house gases (GSGs) Resulting in hazardous impact on the environment 3 Continue-2 Air transportation is the second largest with a 13% share of transport-relatedRead More Is Taxation is Theft? Essay1037 Words   |  5 Pages Taxation, the government acquisition of property from the individual has mixed support in any Western democratic system. To make its way into the good will of the majority, taxation has surrounded itself with doctrines of justification. No law which lacks public approval or acquiescence is enforceable, and to gain such support it must address itself to our sense of correctness. This is particularly necessary for statutes authorizing the taking of private property. Sometimes depicted as ‘theft’ byRead MoreShould There Be A Sugar Tax1326 Words   |  6 PagesShould There be a Sugar Tax in New Zealand? Introduction: The New Zealand government should have a tax to regulate the consumption of sugary drinks or foods, because this leads to decrease issues of people s health and it would be heartening healthy conducts. †¢ Body: 1. A sugar tax would reduce people’s health issues. (supporting) a) Sugar taxes help to prevent obesity. b) Sugar taxes also would helpful for prevention of dental problems. 2. Sugar tax service would encourage healthy behaviorsRead MoreDetermining The Tax System Should Be Structured1748 Words   |  7 PagesIntroduction. Arguably, the purpose of the tax system is to generate adequate funds to finance the smooth running of an economy, most especially in terms of redistribution of income to bridge the gap between the rich and poor. Designing and adopting a tax system that is efficient and fair is of great importance to the government and policy makers of any nation. According to Mankiw et al (2009) designing a system of taxation which is optimal has been a long standing issue which has been of interest