...THE IMPOSITION OF TAXES ON THE DEMAND Author’s name Class name Professor’s name Institution City, State Date The imposition of taxes on supply and demand is frequently used to explain the effects of economic policy in economics. The supply curve is usually depicted on a graph with the price on the y-axis and demand on x-axis. The supply curve slopes upward demonstrating that when a price of a good with inelastic demand increases, its quantity supply also increases. However the demand curve slopes downward depicting that when the price of goods with inelastic demands fall, the demand increases. Both curves intersect the y-axis somewhere at some point (Green, 2008). The point of intersection is called the equilibrium level of supply and demand, and it shows the quantity producers of goods are willing to provide at the price buyers are willing to pay. An imposition of tax means charging duty on goods for example milk or fuel. When the price is added it has the effect of gearing the supply curve up by the tax charged. Therefore, an imposition in tax effects to an increase in income tax (Green, 2008). According to TR Jain (2008), a price effect arises when an increase in the prices of a commodity leads to increase in revenue. The increase in price tends not to affect the quantity of goods with inelastic demand consumers’ purchase. Consumers will consume the same amount of goods of inelastic demand regardless of whether the price increases or not, this increases revenue...
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...AN ANALYSIS OF THE EFFECTS OF MARGINAL TAX CUTS SAYANTAN MITRA In my last paper, I argued in favor of the across-the-board tax-cuts proposed by the Republican presidential candidate Mitt Romney. With the help of instances from both micro as well as macroeconomics, I showed how a reduction in marginal and corporate taxes was beneficial for the economy. I used the growth in Gross Domestic Product (GDP) as a measure of the positive direction which the economy would take as a result of tax-cuts. I used empirical evidence to show that the tax-cuts on previous occasions have resulted in economic growth and increase in GDP of the United States. My detailed arguments and results can be found in the Appendix. In this paper I will analyze the effects of marginal tax-cuts on the different income groups, the high income and low income households. I will also analyze the variations in marginal propensity to save taking account demographic characteristics such as age group and education level as well as income. This would aid in an analysis of which portions of the population would be benefitted from a tax-cut. Therefore, I would like to would policy prescriptions for cutting taxes. When there is a reduction in payroll tax rates, it can have different effects on the different parts of the population. For low-income households, a tax-cut would encourage them to work for more hours. On the other hand, for high-income households, it may lead to them working lesser. These can be explained...
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...Supplement 2003 pp. 1–25 The Effect of State Income Tax Apportionment and Tax Incentives on New Capital Expenditures Sanjay Gupta and Mary Ann Hofmann ABSTRACT: This study examines how variations in states’ corporate income tax regimes affect new capital investment by business. Using U.S. state-aggregated data from 1983 to 1996, we find in pooled and fixed-effects regressions that new capital expenditures by corporations in the manufacturing sector are decreasing in the income tax burden on property (measured as the product of the statutory tax rate and the property factor weight), and increasing at a decreasing rate in investment-related tax incentives. The effect of the income tax burden on property is more pronounced for states mandating unitary taxation or the throwback rule. Triangulating our empirical findings with prior analytical and simulation studies suggests the following hierarchy for the relative importance of major attributes of state corporate income tax regimes: the unitary or throwback requirement is most influential on incremental capital investment, followed by apportionment weights and tax rates, and, finally, investment-related incentives. Keywords: state taxation; apportionment formula; tax incentives, unitary business principle, throwback rule. JEL Classification: H20; H71. INTRODUCTION he purpose of this study is to provide empirical evidence on the effects of variations in states’ corporate income tax regimes on new capital investment...
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...Background of the Study Tax is an instrument to regulate economic growth and development across every economy. As a result, governments across the world impose one form of tax or the other. The main purpose of imposing tax has been for the government concerned to use the proceeds of the taxation to run the government and to provide essential services. Before a country considers efficient and effective way of administering tax system; it must possess a clear picture of the scope of its tax system as well as considering the tax rate and tax base over time. The quantity and quality of revenue required by tax administrators are to a large extent determined by the type of tax system which is introduced. A nation’s tax goals are not achieved by designing a tax system which is fair, any fair system which is not administered as planned becomes inequitable. Thus, a good tax system is capable of financing the necessary level of public spending in the most efficient and equitable way possible. It should also (1) raise enough revenue to finance essential expenditures without recourses to excessive public sector borrowing, (2) raise the revenue in ways that are equitable; that minimized its disincentive effects on economic activities, (3) do so in ways that do not deviate substantially from international norms. (Tanzi and Zee,2000). It is being noted that the aims and objectives of taxation differ from one country to the other. However, an essential common feature of tax has been the dynamic...
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...of Bangladesh’s current tax system * Growth trends and revenue structure of Bangladesh * Contribution of direct and indirect taxes to revenue * Reasons for introducing vat in Bangladesh * Ratio of VAT to Revenue & VAT to Tax * Revenue Structure during Pre and Post VAT Regime * VAT Rates in Selected Countries * VAT Productivity in Selected Countries * Some Important Features of VAT in Bangladesh * Tax Base for VAT * Arguments For VAT * Arguments against VAT * Reforms in VAT: Current Initiatives Introduction: Value Added Tax (VAT) is imposed on value added by a manufacturer of a firm or distributors. Value added tax means a tax on the amount by which the value of an article has been increased at each stage of production. It is a multistage consumption tax imposed on goods and services, which is collected at every stage of production and distribution rather than at the retail stage alone. Objectives of the Study: We can gain knowledge about the tax system (especially VAT) of Bangladesh by studying this topic. As following aspects of tax we can learn from this study: 1. To present an overview of tax system of Bangladesh. 2. To evaluate Govt. Performance in collecting revenue. 3. To identify the effect of the tax system (especially VAT) to economic development of Bangladesh. 4. To identify the problems and weaknesses of collecting revenue through VAT. Salient Features of Bangladesh’s Current Tax System: Notwithstanding...
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...Review Related Literature Many of the Filipinos now are health conscious and It has been shown that combustion aerosols from cigarettes contain common chemical components such as carbon dioxide and carbon monoxide (Siahpush et al., 2006). Carbon monoxide is a major contributor to cardiovascular diseases from smoking. It impairs oxygen transportation in the blood. It is also strongly linked with the development of coronary heart disease. One gaseous constituent in cigarette smoke is hydrogen cyanide. Cyanide released from a cigarette can be 160 times greater than the level considered safe (Siahpush et al., 2006). It has a direct, harmful effect on the cilia, a part of the natural lung clearing mechanism in humans, thereby increasing the likelihood of developing disease. Risk from cyanide is significant with just one cigarette per day. Another gaseous constituent in cigarette smoke Silpakorn U Science & Tech J Vol.3(1), 2009 Smoking Behavior of Student is nitrogen oxide, of which the primary form is nitric oxide (NO) (Tobacco-Related Disease Research Program, 2007). Students who have never tried to quit smoking should be aware of their chance to get serious health in their future. Now a day’s most of the smokers are student the more the price of cigarettes high the lessen student who wants smoke. Through this study many could benefit not just for lessen expenses but also more knowledge on how it could affect in their lives. They also should be educated on toxic chemicals...
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...dried leaves. In 1591, Mexico has already been growing tobacco at an increasing rate. It was believed that the tobacco was introduced by the Spaniards and Portuguese to mainland Europe, East Indies and Asia while they are on an expedition for searching for spices and spreading Christianity. Cigarette smoking became one of the highly sought after vice in the Philippines because of the affordable price of each stick ranging from seventy-five centavos to 2 pesos each, depending on its brand. The Philippine government came up with an idea of increasing the taxes imposed upon alcoholic beverages and cigarette sticks in order to minimize its harmful effects to human body. On 02 December 2012, President Benigno S. Aquino III signed into law Republic Act 10351, otherwise known as the “Sin Tax Law” which provides for additional tax on sin products such as alcohols and tobacco products. Prices of liquor and tobacco products increased from 100-200% immediately after the...
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...ASC 740, Income Taxes, provides that a tax liability or asset shall be recognized based on the provisions of ASC740 for the estimated tax payable or refundable on tax returns for the current and prior years; and a deferred tax liability or asset shall be recognized for the estimated future tax effects attributable to temporary differences and carryforwards. Deferred tax liabilities are measured by multiplying the applicable tax rate by the taxable temporary differences while deferred tax assets are measured multiplying the applicable tax rate by the deductible temporary differences and operating loss carryforwards, plus tax credit carryforwards (ASC 740-10-30-5). The applicable tax rate utilized in the measurement of deferred tax assets (liabilities)...
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...Tax Research 1．A higher federal income tax rate will benefit the overall economy; however, it is closely related to people’s incentive to work and government spending. A higher income tax rate hurts people’s incentive to produce, since it lowers the after-tax return from work. The higher the tax rate, the more time people spend evading taxes and the less time they spend on more productive activity, and also, it depends on the current tax rate levels and how much the tax rate increases. Considering a low income tax society, say 5%, a 1% increase in the income tax rate will not significantly reduce the productivity compared with another society with 90% income tax. On the other hand, a lower federal income tax rate will be some kind of bad for the overall economy, which will decrease not only the income of the country, but also the life levels of the whole country citizens. There is no doubt that with less money, the government will care less about the foundational installations of the country, the health care of the citizens, even the public security. What is more, even though the less income tax rate will be incentive for some people who would not like to donate their money to the country to work harder to earn much more money, leading the high production of the country, the extra money is far more less to overweigh the decrease of the levels of the whole country. However, a lower income tax rate on wage income can increase the labor supply. Based on the labor demand function...
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...methodically analyzes Efficiency and Equity Effects of Taxes and Subsidies. Beginning in Chapter 10 Structure of Taxes, Chapter 11 Efficiency Effects of Taxes and Subsidies, Chapter 12 Incentive Effects of Taxation, and Chapter Equity Aspects of Taxes and Expenditures. In the author, Anderson, Chapter 10 Structure of Taxes starts out by focusing on a foundational understanding of tax systems, how they are designed, and how best to evaluate whether they work the way we would like them to work. Anderson goes on to state that, “we have an innate concern that the tax system be fair and efficient. We want a system that treats people fairly. Roughly speaking, we want a tax system that taxes on the basis of ability to pay, (p.289).” Anderson goes on to explain that in order to understand how tax systems work one must be able to understand what is taxed. He defines the term tax base as, “the item or activity that is taxed, (p.292).” He gives three examples of tax base. The first example is income tax. Income tax is according to Anderson, “applied to certain forms of income such as wages but not to other forms of income such as interest earned from municipal bonds. The second example is sales tax. Sales tax is according to Anderson, “applied to certain transactions, like the purchase of a good, but not other transactions, like the purchase of a service, (p.292).” The third example is Value-Added Tax Base. Value-Added Tax Base according to Anderson is, “a tax applied to the difference between the...
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...Psychological motivation of tax payers Tax compliance has been linked heavily with deterrence as the most important compliance-increasing factor but now a days importance of tax morale is being considered as intrinsic motivational toll for the honestly pay taxes. Tax morale , however, depends on the positive interaction of individual taxpayers and the taxing authority through fiscal exchange in a broader arena . Fiscal exchange, for example, may involve adequate provision of public services for the tax payers rather than purely monetary rewards which may be influenced by political decisions or by the way tax authorities treat tax payers in course assessment of the tax liability of an assessee. The relationship between the taxpayers and the taxing authority should be an as an implicit or “psychological tax contract”, under which the taxing authority must balance strategies of deterrence with those of responsive regulation. Tax compliance has many facets. The wealthy tax payers refrain from declaring their income physically earned in foreign countries mostly earned through non declaration or less declaration of commission on foreign trade and the wealth legally in foreign countries in the name of “second home” which is far from providing a comprehensive picture of their income and wealth as well. Tax non-compliance may also be generated through under reporting of income by relatively less wealthy tax payers when they work in shadow economy i.e. when they work in...
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...Enumerate the trade effects of various export taxes. 1) INSTRUMENTS OF EXPORT RESTRICTIONS There are various forms of export restrictions. These include export taxes, export bans, regulated exports, supervised exports. A. Export taxes: ad valorem tax, specified as a percentage tax of the value of the product; or a specific tax. All types of export taxes have the effect of reducing the volume of exports and are therefore a form of export restriction. B. Export bans to prevent exports of certain products. E.g.: on live fishery products, wildlife, hides and skins of certain endangered species, or to prevent exports of dangerous materials. C. Regulated exports include quotas and licensing requirements. o Quotas define a maximum volume of exports, o Licensing requirements establish that a commodity can be exported only through approved exporters. . D. Supervised exports is a mixed form of control used for some commodities to ensure an adequate domestic supply of "essential goods" at a reasonable price. 2) OVERALL WELFARE EFFECTS FOR THE EXPORTING COUNTRY, THE IMPORTING COUNTRY AND THE WORLD The overall world static welfare effect of an export tax is also unambiguously negative. The terms-of- trade gain to the exporting country is equal to the terms-of-trade loss to the importer countries. Thus, a tax on exports results in a production efficiency loss, due to the substitution...
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...Vol. 21,No. 4, Part I, July 1973 01973 by The University of Chicago. All rights reserved. Printed in U.S.A. Geraldo W. Sazama University of Connecticut Harlan Davis U.S. Agency for InternationalDevelopment, Brazil Land taxation frequently has been presented as a panacea for certain problems of agricultural development. More specifically, the land tax has been seen by many as aquick and easy substitute for land reform, especially in Latin America.' This type of thinking, unfortunately, can cloud the real and important contribution that land taxation can make to the develop ment process. Because of its ability to be relatively neutral in its economic effects on agriculture, land taxation isalmost unique among the many ways 2 available to convert surplus agricultural output into development capital. It is, however, no substitute for a direct land reform program; it merely complements a nation's direct efforts to improve the agricultural sector while it goes about its principal task of raising new public investment capital for the economy.3 This paper uses both theoretical and empirical analysis to examine the effectiveness ofa land tax as aregulatory tool. Weare particularly interested in evaluating land taxation as adevice to induce an increase in agricultural output and productivity and amore equitable and economic distribution of * The authors appreciate the comments of John Strasma and Dale Adams. Author Sazama is grateful for financial support for this research from the Social...
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...Subject: Income tax treatment I appreciate that you choose me to deal with the questions for you, these are really good questions which we should pay attention to. In this memo, I would answer your questions about the specific treatment of your company’s income taxes according to my research in FASB Accounting Standard Codification and other sources. First, you ask about if the income taxes should be considered as an expense for financial reporting purpose. According to my research, I found that most accountants now agree that corporate income tax is an expense. Treating income tax as an expense is required under GAAP. This treatment is consistent with proprietary theory because the earnings that accrue to owners are reduced by corporate obligations to the government. Also, because the income tax does not result from transactions with owners, expensing corporate income tax is consistent with the SFAC No. 6 definition of comprehensive income. Thus, on the surface, accounting for income taxes would appear to be a nonissue. So for your company’s financial reporting, you should treat income taxes as an expense. Your second question is about the difference between intraperiod and interperiod tax allocation and how to differ these two, as well as the effect on financial reporting of these two methods. This is really a good question, because new start-up company would always be confused at this part. Intraperiod tax allocation method that allocates total income tax expense or benefit...
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...Chapter 12 Government and the Labor Market Next page McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 12-2 1.Public-Sector Employment and Wages Jump to first page 12-3 Government Employment 25.0 • The number of federal civilian and state and local government employees has risen over time. • The growth of federal employment has been much smaller than the growth at the state and local level. 20.0 Millions 15.0 10.0 5.0 0.0 1950 1960 1970 1980 1990 2000 2004 2006 Federal Civilian Military State and Local Jump to first page 12-4 Relative Government Employment 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1950 1960 1970 1980 1990 2000 2004 2006 Federal Civilian Jump to first page • The share of employment in the public sector has risen over time. • This increase is due to increased demand for government services due to factors such as the schooling needs of the baby boom, higher real income, public sector unions, and increased regulation. Millions State and Local 12-5 Public vs. Private Pay Most government units attempt to set pay equal to those to comparable privatesector workers. In the past, Federal government workers earned premium relative to their private sector counterparts. The premium has fallen over time. Public sector workers receive a greater fraction of the their compensation in the form of fringe benefits. Jump to first page 12-6 2. The Military Sector: The Draft Versus the Voluntary Army Jump...
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