Tax systems - Essay Example

Only on StudentShare

Extract of sample
Tax systems

Indirect taxation leads to income effect. Income effect occurs when people find that they have surplus money and therefore their demand for goods and services increase. In case of no tax levied people after earning certain amount of income will start preferring leisure over work. Since indirect taxation increases the prices of goods and services people will have to work harder to keep up their standard of living and will have to earn more income to buy the same “basket” of goods that they were buying before and this will lead to more working hours in the economy. In this case, increase in taxation would result in increase in incentives for people to work hard and to expend more effort.ii) Regressive Taxation system is one where rich people pay lesser proportion of their income as tax than the poorer people. For example, a flat tax of $5 would make a higher proportion for someone earning $100/month than someone earning $200/month. For someone earning $100/month it would be 5%, whereas for the other guy it would be 2.5%. This kind of tax system is normally regressive and usually indirect taxation is regressive. On the other hand progressive system is one where rich people pay higher tax than the poor people. Income tax is usually progressive as it takes into account the income of people. Regressive taxation can be an incentive for people to work hard and earn more money, whereas as progressive systems can be a disincentiveSince regressive system leads to same amount of tax in absolute terms for both rich and poor. ...Show more

Summary

In the paper “Tax systems” the author analyzes two types of tax systems that work simultaneously in an economy. These two systems are called direct and indirect taxation. Both of these systems have different effects on the economy in terms of an incentive or disincentive.

Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Tax systems"
with a personal 20% discount.
Grab the best paper

Related Essays

Corporation Taxation Foreign Tax Credit
The discussion covers quite a number of topics including credit for foreign income taxes, limitation on credit, maximum allowable foreign tax credit, carry-back and carryover of the foreign tax credit, claiming the tax credit or deduction each year, foreign taxes not eligible for the foreign tax credit, foreign source income, refunds and adjustments and corporate foreign tax credit situation in the US.
10 pages (2500 words) Research Paper
Income Tax and Corporation Tax in the United Kingdom
The report will cover the following: the scope & core rules of income tax and corporation tax; direct taxes v indirect taxes; revenue generated by direct & indirect taxes; tax revenues & UK government expenditure; progressivity of income tax & corporation tax in the UK; responsibility of notification of income and payment of tax.
15 pages (3750 words) Essay
Tax Avoidance OR International Accounting Standards
Personal income taxes are paid by individuals whilst corporate taxes are paid by companies (Fuest and Riedel, 2009). The taxes are paid as a percentage of the income or the profits of entities. The UK Governments risk losing UK businesses to other jurisdictions if they impose extremely high taxes (Blankson, 2004).
15 pages (3750 words) Dissertation
Tax system contribution to economic growth
Tax system plays a huge role with respect to rescuing ailing economy and increasing its growth prospect overtime. Most of countries across the globe operate almost similar taxation policies and systems but they differ in how they apply them on key economic performance measures. Policy makers currently consider taxation a major debatable issue.
9 pages (2250 words) Essay
Finance for Business Decisions
However; a rational investor must not rely so much on history and perceived prestige but on rational data and exact trends of the stock of the company. Shifts of Share Prices of Westpac Bank In order to be in a capacity to know the share price of Westpac Bank thoroughly; it is essential to draw a trend.
7 pages (1750 words) Essay
A Brief for a financial case
In the year 2004, one division of Teletech Corporation i.e. telecommunication services had generated return on capital of almost
2 pages (500 words) Essay
Financial Management
The incremental cost will have a negative effect on the cash flows and thus the net present value will decrease.The cost of the tanker cars should also be included in the project since Victoria chemicals owns tanker cars even though it gives a negative NPV this will be
1 pages (250 words) Essay
Changing tax laws to reduce tax avoidance through the use of partnerships
According to Feldstein (1999), this legality of tax avoidance could reach a point that it will turn out to be an illegality. If any government were to seal or curb these tax avoidance
2 pages (500 words) Research Paper
Tax avoidance; a debate easily resolved?
This view has always resulted into several views and tax related crimes like tax evasion and even avoidance. Such acts have the tends to reduce the amount of tax that any given individual pays. Therefore, with these entire issues, how would we approach the subject of tax
8 pages (2000 words) Assignment
Tax burden on the middle class
Typically, the states that do not collect income tax tend to impose higher rates on sales and property tax (Terri 222). Arguably, the upper-class that consists of millionaires and billionaires pay a lower tax rate than many lower
5 pages (1250 words) Thesis
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT