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Reforming the U.S. Corporate Tax System to Increase Tax Competitiveness - Essay Example
Author : bstroman
Finance & Accounting
Pages 11 (2761 words)
The researcher of this study is being carried out to present the current system of taxation, particularly with respect to income taxation of both individuals and corporate entities, analyze the effects thereof, and recommend areas for improvement…
Center of discussion in this paper is taxation as the means by which the sovereign body raises income through collection from natural or juridical persons to defray the expenses of the government so that the latter could perform its functions. Without taxes, the government cannot exist as it will not be able to deliver the services expected from them by the constituents. Although one of the fundamental powers of the State, the exercise of the power of taxation however should not be abused. Certain principles must guide its application so as to make it as equitable and efficient to all stakeholders as it must be. Since taxation generally depends on income, taxes should be proportionate thereto and should not go beyond the net income; otherwise, the same would constitute as part of the expense already that could deprive the income-earner of the fruits of his labor. However, certain rules and practices in the taxation system of the United States appear to violate the principle of equity. This results to resentment, loss of bigger revenues, lesser capital investments in the country, and ultimately, deprivation of better economic life for the citizenry. There are two (2) kinds of international tax systems: (i) worldwide; and (ii) territorial. The United States system of taxation is classified as worldwide as it imposes taxes on all incomes derived by the United States domestic companies within and outside its territorial jurisdiction. ...