...S. Tax System The art of taxation was in the “plucking the goose so as to obtain the largest amount of the feathers with the least possible amount of hissing”, said by Jean-Baptiste Colbert, the seventeenth-century French finance minister. (Miller) From the historic perspective, current government of United States has developed a very efficient tax system of plucking its private–sector goose. While it seems this tax system indeed obtain the largest amount of the feathers, but the amount of hissing is growing. Due to a drop in individual income taxes, corporate income taxes, and estate taxes combining with the substantially change in the composition of top incomes, the U.S. tax system has became less progressive. According to the relationship between tax base and tax rate. There are three branches of tax system in the United States: proportional taxation, progressive taxation, and regressive taxation. Progressive taxation and regressive taxation are based on the proportional taxation, in which tax rate is fixed weather the taxable base amount increases or decreases. Based on the proportional taxation system, the progressive taxation is the one in which the tax rate increases as the taxable base amount increases, and the regressive taxation is opposite. Under those three taxation systems, there are kinds of taxes, primary including individual income tax, corporate income tax, estate and gift tax, and payroll tax. From the historic perspective, the overall U.S. federal tax system...
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...Formation | Liability | Taxation | Global Implications | Sole Proprietorship | One-person entity where debts and liabilities of the business are also personal debts and liabilities of the principal. Simplest form of business organization | No paperwork is required unless local licensing requirements-form to be filed if business name does not contain owner’s name | The owner is fully liable for all debts of the business and personal assets are subject to the claims of business creditors | Not subject to corporate income tax and no tax return is filed on behalf of business. The reports of business income or business loss is based on individual tax rate | The internet has provided more opportunities for even sole proprietors to go global- Collecting money owed can be challenging through laws and regulatory agencies as they differ between countries | Partnership | | | | | | Limited Partnership | | | | | | Corporation | A fictitious legal entity that exists as an independent “person” separate from its principles. A corporation can be privately or publicly held. | A corporation probably has the most formal filing and reporting requirements. In order to form a corporation you have go through state law filing, and formation is governed through state statutes. | Limited liability because the owner of the corporation, stockholders, is not liable for its debts or acts. | Considered a separate legal, taxable entity from the owners for income tax purposes. Meaning corporations...
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...Businesses fall under one of two federal tax systems: Taxation of both the entity itself (on the income it earns) and the owners (on dividends or other profit participation the owners receive from the business). This system applies to the business S-corporation-called the "C-corporation" (C-corp) for reasons we'll see shortly-and the system of taxing first the corporation and then its owners is called the "corporate double tax." "Pass through" taxation. The entity (called a "flow-through" entity) is not taxed but its owners are each taxed (more or less) on their proportionate shares of the entity's income. The leading forms of pass through entity (further explained below) are: Partnerships, of various types. "S-corporations" (S-corps), as distinguished from C-corps. Limited liability companies (LLCs). A sole proprietorship such as John Doe Plumbing or Marcus Welby, M.D. is also considered a pass through entity even though no "organization" may be involved. The first major consideration (in this case, a tax consideration) in choosing the form of doing business is whether to choose an entity (such as a C-corp) that has two levels of tax on income or a pass through entity that has only one level (directly on the owners). Losses are directly deductible by pass through owners while C-corp losses are deducted only against profits (past or future) and don't pass through to owners. The major business consideration (as opposed to tax consideration) in choosing the form of business is...
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...feasible tax collecting system which is fair and balanced to both businesses and citizens of the United States. The United States currently uses a progressive tax system, which is dependent on two important factors: income, which is a key component of the progressive taxation, depending on income of an individual. The tax rate increases for higher income earners and decreases for lower income earners. The other major factor in the progressive taxation system is expenditures. Expenditures are various sales takes that impose or collect revenue. The concept of expenditures is the more you spend, the more taxes you will pay thus increasing revenue within the progressive taxation system. The United States did not start with a progressive tax system but before the 16th Amendment was ratified in 1913, the United States had a flat tax. The United States tax code evolved through time, as far back as the 13 original colonies. The colonies back then were heavily taxed by Great Britain, so much so, that they rebelled against Great Britain in an act of the Boston Tea Party to effectively protest a tax which they had no input in and no representation by the government of Great Britain, this led to the Revolutionary War and the fight for independence. Through the early years that America collected taxes, America was virtually tax free due to the heavy handed taxation of Great Britain. “The new American government was understandably cautious when it came to taxation – direct taxation was prevented...
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...Kingdom. The country today operates a federal system of government in which power is shared between: the Federal, State and Local governments. Revenue generation has always been a crucial part of every government, authority or kingdom as the case may be. The revenue available determines to a large extent its capabilities, policy, functions and plans among others. For revenue generation, tax has always been a vital source in order to meet expenditures of the government. According to Ogundele, the essence of all taxes is the removal of resources from private hands of the individuals, corporate bodies, trusts, families, societies, and communities into the public sector to finance activities that has to do with the whole society. According to Louis Kaplow (2006;2) “Raising revenue to fund government expenditures on public goods and services is a fundamental purpose of taxation” Also Lymer and Oats (2008;14) noted that government functions include managing and regulating the economy (for example, protection of the environment) Developing the society and providing public goods. A comparison of the tax percentage, revenue generated by the government before 1970s, with that in recent time’s shows that there has been a sharp decline. Over the past four decades, the country’s revenues were largely derived from primary products. Between 1960 and the early 1970s, revenue from agricultural products dominated, while revenue...
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...TAXATION PAPERS WORKING PAPER N.33 - 2012 Serena Fatica Thomas Hemmelgarn Gaëtan Nicodème The Debt-Equity Tax Bias: consequences and solutions Taxation and customs union Taxation Papers are written by the staff of the European Commission's Directorate-General for Taxation and Customs Union, or by experts working in association with them. Taxation Papers are intended to increase awareness of the work being done by the staff and to seek comments and suggestions for further analyses. The views expressed in the Taxation Papers are solely those of the authors and do not necessarily reflect the views of the European Commission. Comments and inquiries should be addressed to: TAXUD TAXATION-PAPERS@ec.europa.eu Cover photo made by Milan Pein Despite all our efforts, we have not yet succeeded in identifying the authors and rights holders for some of the images. If you believe that you may be a rights holder, we invite you to contact the Central Audiovisual Library of the European Commission. This paper is available in English only. Europe Direct is a service to help you find answers to your questions about the European Union Freephone number: 00 800 6 7 8 9 10 11 A great deal of additional information on the European Union is available on the Internet. It can be accessed through EUROPA at: http://europa.eu. For information on EU tax policy visit the European Commission's website at: http://ec.europa.eu/taxation_customs/taxation/index_en.htm ...
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...Corporate taxation in Kenya Income Tax, or the tax on income, is charged on income of a person (individual & or Companies) for each year in accordance with section 3(1) of the Income Tax Act. S 3(1)’’..... a tax to be known as income tax shall be charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.’’ It is important to understand the words and phrases used in the taxation of income for easier interpretation. These include: Year of income. Year of Income is a period of 12 months commencing 1 January and ending on 31 December in each year. It is the same as calendar year. Income tax is charged for each year of income. The year of income should be distinguished from the accounting year. There is a date to which accounts of a business are prepared each year, and this date would indicate the accounting year end. The accounting year ending on 31 December would coincide with the year of income. Other accounting year-ends would however fall in a given year of income and the profit or loss per the accounts would be for that year of income. For example, an accounting date ended 30 May 2011 would fall to be treated as the year of Income 2011. (Taxable) income this is a gross income from various sources minus allowable deductions i.e. expenses incurred wholly and exclusively in the production of the income. (Taxable) person, A person whose income is taxed is either: a)...
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...Singapore Tax Rates and Income Tax System Introduction Singapore’s is one of the world’s biggest economies. Since the global financial crisis and more recently, the Eurozone sovereign debt crisis and the downgrading of the US credit ratings, many global and local investors has sought Singapore as a new safe haven for investing their wealth in and setting up businesses and regional headquarters. In 2010, Singapore’s economy has rebounded close to 15% year on year. Singapore, due to its scarcity of natural resources, depends heavily on foreign investments for growth and economic expansion. Therefore, the government’s policy is to advocate Singapore as a global hub for international trade and commerce. Over the past years, Singapore has always been ranked of one the frontrunners in the world in terms ease of doing business (1), world leader in foreign trade and investment (1), best investment potential for 16 consecutive years (2), most open economy for international trade and investment (1). Source: http://www.weforum.org/reports/global-enabling-trade-report-2010?fo=1 http://app.www.sg/who/196/Business-and-working-conditions.aspx http://www.doingbusiness.org/data/exploreeconomies/singapore/ Another significant reason Singapore continues to attract both local and overseas investment is due to its tax regime – well-known for its attractive corporate and personal tax rates, tax relief measures, absences of capital gains tax, one tier tax system and extensive double...
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...company, we focus on tax purpose but not immigration. Government interest on Tax, you earn your profit, no matter which corner you are working in the world, you have to pay tax. That is not only your personal liability to the country who grant you a resident or citizenship, and also the country allow you to acquire profit to rich your pocket.The definition of resident for company is in ITAA36 s6(1) state that:A company which is incorporated in Australia, or which, not being incorporated in Australia carried on business in Australia, and has either its central management and control in Australia, or its voting power controlled by the shareholder who are resident of Australia. Page 77 understanding taxation law 2010 Frank GildersBut the current definition of Australia of residency company do perform a highly compulate system and the double tax with a higher tax rate, which is discourage the over-sea investor and bring trouble to Australian itself. – the decrease the competitive ability in the international trading and business market. Analysis :There are many different kind of business cooperation in which investors can do business in Australia, including corporations, branch offices, subsidiaries, trusts, joint ventures and partnerships. For the international investors, the most common way are usually form a Australian subsidiary companies or Australian branch offices. Owing to the Australia tax law, both of them have...
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...BASIC PRINCIPLES OF TAXATION IN SINGAPORE 3-4 2. UNDERSTANDING THE SINGAPORE TAX SYSTEM 4-6 3. TAX RATES 6 4. TAX ADMINISTRATION AND COMPLIANCE 7 NEWZEALAND 5. TAXATION IN NEWZEALAND 7-8 6. INCOME SUBJECT TO TAX 8-9 7. TAX RATES 9-11 8. TAX ADMINISTRATION AND COMPLIANCE 11 1. BASIC PRINCIPLES OF TAXATION IN SINGAPORE The scope of taxation in Singapore 1. Income tax is charged on income from an employment exercised in Singapore and on any income accrued in or derived from Singapore, regardless of the tax residency of the individual. The taxability of employment income depends on where the services are performed, not where the payment is made or where the employer is resident. 2. With effect from 1 January 2004, income derived from sources outside Singapore, even if received in Singapore (except for income received through a partnership in Singapore), is exempt from Singapore tax. The tax year 3. In Singapore, an individual's income of the preceding calendar year ('tax year') is assessed to tax in the following calendar year ('Year of Assessment'). For example, if an individual commenced his or her employment in Singapore in April 2010, the employment income derived in the period April to December 2010 will be chargeable to tax in Year of Assessment (“YA”) 2011. Methods of calculating tax 4. Resident individuals are entitled to personal reliefs and are subject to graduated tax rates ranging from...
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...Forum on Tax Reform Fundamental Tax Reform: An International Perspective Abstract - This paper examines trends in tax reforms. The analysis is limited to the experience of 30 OECD countries, and focuses particularly on changes since the year 2000. The paper analyses the general trend of reductions in both tax revenues and rates and the diversity in tax policies across OECD countries, reflecting the diversity in both economic circumstances and policy objectives. Developments in tax administration are also briefly dealt with. Some of the challenges for tax policymakers and administrators that are likely to arise over the next few years are identified, and possible alternative approaches to solving them are put forward. INTRODUCTION ax reform is an ongoing process, with tax policymakers and tax administrators continually adapting their tax systems to reflect changing economic, social and political circumstances. Over the last two decades, almost all Organisation for Economic Cooperation and Development (OECD) countries have undertaken structural changes to their tax system that have significantly altered the way these systems function and their economic and social impacts.1 In some countries (for example, many of the Eastern European economies in transition), the reforms have been profound and implemented over a very short period of time. In others (most of the European countries), the reforms have been a gradual process of adaptation, but over time they have substantially redesigned...
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...ations. Creditors can claim personal assets of business owners and can sue if there is a breach of contract. Income Taxes All income rendered is treated as personal income for the business owner. Ordinary personal income has the highest tax rate, but there are different income takes rates depending on the type of income being taxed. Being able to plane to take advantage of a lower tax rate is difficult for many sole proprietors. Longevity / Continuity The Sole Proprietor is the sole owner, with no partners in the business, if the Sole Proprietor becomes disabled, retires or dies the business is dissolved. It does not the perpetual existence of a corporation. Control The Sole Proprietor makes all the decisions and has total ownership over finances. Profit Retention 100% profit retention allows them to use the profit at their discretion. they can reinvest in their current business, start a new business or use it for personal reasons. Location Expanding or moving is not very complicated. Using a DBA name allows a Sole Proprietor to legally do business under a name other than their full name. To move, you register your name or your DBA to the state you’re moving to. Moving from a state with income tax to a state without income tax will take some planning to see how the changes effect your business. Convenience/Burden As a Sole Proprietor you have all the responsibility to operate your business. You can’t bring in others a profitsharing owners. Also, as a Sole Proprietor you...
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...to (Ricardo, 817), the tax is a financial charge imposed on taxpayers. Avoidance or evasion of tax is punishable by law. Taxes can either be indirect taxes or direct taxes. It is worth noting that a few countries in the Middle East impose no taxation. Examples of Direct taxes include income tax, corporate tax, and any tax imposed on property. Indirect taxes, on the other hand, include, value added tax, sales tax, per unit tax and excise tax. In this paper, I will discuss excise taxes and also the impact of taxation. According to (Kaplow, 512), excise taxes are paid when certain goods such as gasoline are purchased. Excised taxes are put in the price of the product. Excise taxes are also imposed because of wagering and also to trucks when they use major highways. In the video, various issues surrounding excise tax have been highlighted. One of these issues includes the principle of taxation that is fairness, and the other issue is tax incidence. A). Benefits Principle According to (Dubin, 234), this principle outlines that imposition of tax should depend on the benefits received. This policy argues that those who should pay high taxes are those who receive greatest benefits. This principle of taxation is applied to usage of public goods such as libraries, highways, national parks, colleges, forests, etc. The principle of fairness explains that tax imposed on individuals or corporate must be equal across the board, all should carry equal tax burden. In my own I do not...
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...LIT1: Task 310.1.5-02, 11, 13 Part A Sole Proprietorship: This form of business is the most common form of new business startup. Legal and tax issues are basic and can be followed without significant assistance from external sources. The business and owner are one in the same and all liabilities will fall upon them personally. The primary key to being a sole proprietor is the owner maintains independence in the decision making of the business and how he or she implements their business plan. LIABILITY: Individual and the business are treated in the same manner. The sole proprietor holds responsibility is for all losses and profits and has the additional responsibility of being personal liable for all actions of the business. INCOME TAXES: The sole proprietor profits are taxed as their personal income with only minimal tax incentives compared to other business models. Business profits or in the case of losses must be reported as personal income tax. LONGEVITY/CONTINUITY: Sole proprietorship can end their business at anytime without legal formalities. CONTROL: An SP business is operated as a single business owner. The control of the business cannot be given to anyone else. PROFIT RETENTION: The profits of the business belong to the owner of the business and are not shared. LOCATION: A sole proprietor is not limited to where it can operate within the United States. Only localized codes and regulations can affect where the business can be located. CONVENIENCE/BURDEN: Sole...
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... By Carlo Johnson Double taxation occurs when a taxpayer is taxed twice for the same asset or income. This happens when taxing jurisdictions overlap and a transaction, asset, or income amount is subject to taxation in both jurisdictions. When an individual must deal with double taxation, he or she may lose a significant portion of income. In some cases, this may cause the double-taxed individual to experience a lowered standard of living. Corporations deal with double taxation too, as a corporation pays taxes on its earnings only to have its shareholders taxed once more. Double tax treaties comprise of agreements between two countries, which, by eliminating international double taxation, promote exchange of goods, persons, services and investment of capital. These are bilateral economic agreements where the countries concerned evaluate the sacrifices and advantages which the treaty brings for each contracting state, including tax forgone and compensating economic advantages. 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. Double taxation is always considered to be one...
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