Finance & Accounting
Pages 8 (2008 words)
TAXATION IN THEORY AND PRACTICE ASSIGNMENT Student’s name: Course Code: Professor’s name: Name of institution: Date: SECTION 1 Introduction A tax system that is efficient should posses the following attributes. It should minimize effects on prices that are relative for purposes of maintaining production efficiency and undisrupted resource allocation (Zhong 2011, p.15).
In addition to that, the Spinney state is in dire need of increasing its revenues. The capital saved by the wealthy individuals can be used to finance the state investment projects (Palil, 2009, p.60). Thus, individuals should be taxed annually depending on their income (GBP) as illustrated in the table below. Income(GBP) % 1-2,440 10 1-37,400 20 37,401-150,000 40 Over 150,000 50 Data source: UK Tax rates 2010-2011(http://www.worldwide-tax.com/uk/uk_taxes_rates.asp) The rate of 10% responds to the income savings of up to 2,440, whilst income dividends below 37,400GBP tax rate is 10%, whereas, income dividend of GBP 37,400-150,000 is taxed at a rate of 32.5%. Finally, those exceeding 150,000GBP should be taxed at a rate of 42.5%. In terms of social security, individuals should be deducted based on their salary. For instance, employers should be deducted a tax rate of 12.8% on salaries above 5,715 GBP, employees at a rate of 11% on salaries of GBP between 5,715-43,875 and an additional of 1% for salaries above GBP of 43,875. On the other hand, self employed should pay a tax rate of 8% for income of 5,715-43,875GBP with an additional of 1% on incomes above GBP 43,875. Corporate tax should be at a rate of 28%. ...