An overview of the characteristics of taxes and methods of taxation

It should ensure maximum social advantage. Payroll tax Unemployment and similar taxes are often imposed on employers based on total payroll. Tax rates are generally fixed, but a different rate may be imposed on employers than on employees. For example, a high excise is used to discourage alcohol consumption, relative to other goods.

The burden implies the relative capacity of the tax-payer to bear the tax. Share on Facebook Step Every tax includes a set of economic activities and individuals to whom the tax applies, and that defines the overall scope of the tax.

Taxation is designed to mobilise the surplus resources in the economy and not deprive the private sector of its resources.

Excise An excise duty is an indirect tax imposed upon goods during the process of their manufacture, production or distribution, and is usually proportionate to their quantity or value.

JCT considers methods of eliminating/lessening double taxation of corporate income

Background—corporate income tax distortions. Such states tend to have a moderate to large amount of tourism or inter-state travel that occurs within their borders, allowing the state to benefit from taxes from people the state would otherwise not tax.

Important Characteristics of a Good Tax System | Taxation

The JCT report considers several possible approaches that would mitigate the distortions of double taxation: Disparate tax rates on dividends and on gains may create an unintended incentive to either hold or sell stock. The charge for the stamp is either a fixed amount or a percentage of the value of the transaction.

The wholesale distributor will then continue the process, charging the retail distributor the VAT on the entire price to the retailer, but remitting only the amount related to the distribution mark-up to the government.

Taxation should be used to finance public services. A number of these countries grant the shareholder a credit only to the extent that the corporation actually has paid tax on dividends which is accomplished by a corporate minimum tax on distributions.

Other major conceptual differences can exist between tax systems. In United States tax lawthere is a distinction between an estate tax and an inheritance tax: Multiple jurisdictions may tax the same property.

Capital gain is generally a gain on sale of capital assets—that is, those assets not held for sale in the ordinary course of business.

It is used to correct the adverse balance of payment: As such, the tax system of one country differs from that of another, depending on the institutional and historical differences.

An additional distortion resulting from the present law corporate income tax rules is the incentive to finance new investments from debt rather than equity on account of the deductibility of interest payments on debt but no comparable deduction for dividends paid on equity. For governments, the ultimate resolution may be confiscation of propertyincarceration or dissolution of the entity.

Capital assets include personal assets in many jurisdictions. Of the above states, only Alaska and New Hampshire do not levy a state sales tax. A good tax system should not hamper the development of trade and industry, but instead help the rapid economic development of the country.

Second, there may be incentives for the retention of earnings in the corporation, which may lead to distortions in the allocation of capital to the extent that corporations with current earnings have less favorable investment opportunities than would their shareholders.

Allowing a dividends-paid deduction brings the treatment of equity closer to that of debt, to some extent eliminating the preference in the tax law in favor of the latter.International taxation is the study or determination of tax on a person or business attempted to mitigate the differing limitations of each of these three broad systems by enacting a hybrid system with characteristics of two or more.

resale prices based on comparable markups, cost plus a markup, and an enterprise profitability method.

International taxation

Corporate Taxation Outline I. Overview of Enterprise Taxation How is corporate income federally taxed? Three categories in the Code: 1.

Characteristics of Taxes

Sole proprietor (individual owner) o Joint owners may individually elect to use different accounting methods, etc. on their tax forms o Cf. Partners, who are bound by joint firm decisions 2. Partnerships. This four CPE hour course provides an overview of U.S. international tax rules, including defining U.S.

and foreign persons, determining sourcing of income, then looking at outbound and inbound compliance issues.

Taxation – Meaning, Types, Characteristics and Principles of a Good Tax System

method of U.S. taxation of a PFIC's undistributed earnings; List the characteristics of the PFIC special excess distribution regime. Taxes can be imposed on many different activities and individuals For instance, a state income tax applies to income earned by individuals within the borders of a certain state.

A federal estate tax applies to all individuals in the country who leave estates behind after death. Guide to Federal Corporate and Individual Taxation CPE Credits: 31 «Back to Search. More Links. Shop CPE Topics ; Accounting; Cite the characteristics, tax treatment, and requirements of property sales, exchanges of property, and sales of easements.

List methods for identifying and valuing inventory, multiple corporation tax. The four main desirable characteristics of taxation system were first introduced by the economist Adam Smith, who concentrated on how to design an effective tax system.

In his book Wealth of Nations published inhe described four desirable characteristics (Equity, Certainty, Convenience and Efficiency) for a tax system.

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An overview of the characteristics of taxes and methods of taxation
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