...The have many different tax rates here in the United States in our Federal, State and local level governments. Tax rates are pretty much put on everything from sales of goods and service, property values to income. It is just a percentage rate at which a person or business is taxed. A particular issue that stands out here lately in regards to tax rates is the Federal corporate income tax rate. The United States tax code for corporate income tax rates has been in a heated debate over the years. The United States corporate income tax is currently at 35%. This makes the United States the 2nd highest corporate income tax rate in the world. The top spot belongs to Japan with 39%. In comparison too most industrial countries around the world such as Ireland, Denmark, China and Switzerland, the United States tax rate is triples their rate. The high tax rate is driving some American multi-international corporations to beg Congress for tax code reform to reduce the current tax rate. Some of these multinternational companies such as Transocean and Halliburton relocated their headquarters in other countries. But research from the GOA says this is slightly exaggerated. Some of these large multi-international companies due to tax breaks, loop hole and offshore bank accounts have pay about average of what other companies in industrial countries pay, some have paid nothing at all. Research shows that some companies have pay less, way less than companies around the world. In 2008 the U...
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...Tax rates The tables below set out tax rates applicable to individuals for the 2012 and 2013 taxation years, together with major personal tax credits for both years. Federal income tax rates — 2013 and 2012 2013 taxable income | Federal marginal tax rate | Up to $43,561 | 15% | $43,562 – up to $87,123 | 22% | $87,124 – up to $135,054 | 26% | $135,055 and over | 29% | | | 2012 taxable income | Federal marginal tax rate | Up to $42,707 | 15% | $42,708 – up to $85,414 | 22% | $85,415 – up to $132,406 | 26% | $132,407 and over | 29% | Personal tax credits — 2013 and 2012 | | | 2013 | 2012 | | | | | 1. | Basic personal amount [paragraph 118(1)(c)] | 1,656 | 1,623 | 2. | Spouse or common-law partner amount [paragraph 118(1)(a)] | 1,656 | 1,623 | | | The spouse or common-law partner credit is reduced by the amount of the spouse or common-law partner’s net income | | | 3. | Eligible dependant amount [paragraph 118(1)(b)] | | | | | Same as for spouse or common-law partner in (2) above | | | 4. | Amount for child under 18 years of age | 335 | 329 | 5. | Infirm dependants [paragraph 118(1)(d)] | | | | Age 18 or over and mentally and physically infirm | 980 | 960 | | The credit is reduced if the dependant’s income exceeds | 6,548 | 6,420 | 6. | Taxpayer is 65 years of age or over [subsection 118(2)] | 1,028 | 1,008 | | | The credit is reduced if income exceeds | 34,562 | 33,884 | 7. | Medical expenses [subsection...
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...Singapore Tax Rates and Income Tax System Introduction Singapore’s is one of the world’s biggest economies. Since the global financial crisis and more recently, the Eurozone sovereign debt crisis and the downgrading of the US credit ratings, many global and local investors has sought Singapore as a new safe haven for investing their wealth in and setting up businesses and regional headquarters. In 2010, Singapore’s economy has rebounded close to 15% year on year. Singapore, due to its scarcity of natural resources, depends heavily on foreign investments for growth and economic expansion. Therefore, the government’s policy is to advocate Singapore as a global hub for international trade and commerce. Over the past years, Singapore has always been ranked of one the frontrunners in the world in terms ease of doing business (1), world leader in foreign trade and investment (1), best investment potential for 16 consecutive years (2), most open economy for international trade and investment (1). Source: http://www.weforum.org/reports/global-enabling-trade-report-2010?fo=1 http://app.www.sg/who/196/Business-and-working-conditions.aspx http://www.doingbusiness.org/data/exploreeconomies/singapore/ Another significant reason Singapore continues to attract both local and overseas investment is due to its tax regime – well-known for its attractive corporate and personal tax rates, tax relief measures, absences of capital gains tax, one tier tax system and extensive double...
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...PERSONAL INCOME TAX RATES Assessment Year 2010, 2011 and 2012 Chargeable Income | Calculations (RM) | Rate % | Tax(RM) | 0-2500 | On the First 2,500 | 0 | 0 | 2,501-5,000 | Next 2,500 | 1 | 25 | 5,001-10,000 | On the First 5,000 Next 5,000 | 3 | 25 150 | 10,001-20,000 | On the First 10,000 Next 10,000 | 3 | 175 300 | 20,001-35,000 | On the First 20,000 Next 15,000 | 7 | 475 1,050 | 35,001-50,000 | On the First 35,000 Next 15,000 | 12 | 1,525 1,800 | 50,001-70,000 | On the First 50,000 Next 20,000 | 19 | 3,325 3,800 | 70,001-100,000 | On the First 70,000 Next 30,000 | 24 | 7,125 7,200 | Exceeding 100,000 | On the First 100,000 Next RM | 26 | 14,325 .......... | Assessment Year 2009 Chargeable Income | Calculations (RM) | Rate % | Tax(RM) | 0-2500 | On the First 2,500 | 0 | 0 | 2,501-5,000 | Next 2,500 | 1 | 25 | 5,001-10,000 | On the First 5,000 Next 5,000 | 3 | 25 150 | 10,001-20,000 | On the First 10,000 Next 10,000 | 3 | 175 300 | 20,001-35,000 | On the First 20,000 Next 15,000 | 7 | 475 1,050 | 35,001-50,000 | On the First 35,000 Next 15,000 | 12 | 1,525 1,800 | 50,001-70,000 | On the First 50,000 Next 20,000 | 19 | 3,325 3,800 | 70,001-100,000 | On the First 70,000 Next 30,000 | 24 | 7,125 7,200 | 100,001-150,000 | On the First 100,000 Next 50,000 | 27 | 14,325 13,500 | 150,001-250,000 | On the First 150,000 Next 100,000 | 27 | 27,825 27,000 | Exceeding 250,000...
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...corporate tax rates dont have well developed and stable economies. So, investors and corporations will recognize the benefits of the low corporate tax rates but will be skeptical of the risks involved. However, Irelands a country that has a stable industrial economy and has one of the lowest corporate tax rates 12.5%. So, it is evident why many corporations are gravitating towards Irish economy and are willing make investments in the country. The report also indicted that “Over the past thirteen years, countries across the globe have reduced their corporate income tax rates, considerably reducing the worldwide average tax rate. In 2003, the worldwide average was approximately 30 percent. By 2016, the average rate had declined by roughly 7 percentage points to 22.5 percent.” It is clear that there is a downward trend of the global corporate tax rate and that is mainly because...
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...Abstract Local governments in Bangladesh have several options at hand to finance their activities and pursue their fiscal policy. These options include the imposition of taxes and the generation of non-tax revenues through fees, levies, cost recovery and user charges, property and investment income, domestic and foreign borrowing, the sale of assets and domestic and foreign grants. Urban Local Governments (ULGs) in developing countries are in dire need of resources not only for investment to meet the increasing demand of growing urban population but also for maintenance of the existing services. But the resources of the municipal bodies are inadequate; infrastructures are in poor condition and services maintenance is neither enough nor would cover the new expansions. Inefficient governance of the municipal bodies is partly responsible for this. Holding tax plays an important role in own revenue of Pourashavas. About 35-45% revenue comes from holding tax. But in Bhairab Pourashava it contributes only 18-20%. Every year, its demands and collection are decreasing. Many factors are responsible for this. This study tries to find out the problems of holding tax collection and assessment. Pourashava requires to pay more attention to solve these problems. If the amount of holding tax is increased, this will help Pourashava gradually become self-financed. Introduction With the rapid urban growth all over the world, the demand for various services and facilities are increasing radically...
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...suffer. Therefore, financial institutions and markets should be well regulated. The final section covers a discussion of the impact of taxation on the firm’s financial activities. ( Suggested Answer to Opener-in-Review Question Consider a buyer who purchased a home that month for $150,000, using $30,000 of her own funds as a down payment and borrowing the remaining $120,000 from a bank via a 30-year mortgage. Two years later, prices in Phoenix rose by 30 percent, and the house was worth $195,000. Assuming that after making two years of payments on the 30-year mortgage, the outstanding mortgage balance was still $118,000. How much equity does the buyer have in her home? What rate of return has she earned on her initial $30,000 investment? Buyer’s equity in her home = $195,000 – $118,000 = $77,000 Rate of return = ($77,000 – $30,000) ÷ $30,000 = $156.67% ( Answers to Review Questions 1. The key participants in financial transactions are individuals, businesses, and governments. These parties participate both as suppliers and demanders of funds. Individuals are the net suppliers, which means that they save more dollars than they borrow, while both businesses and governments are net demanders because they borrow more than they save. One could say that individuals provide the excess funds required by businesses and governments. Financial...
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...Exercises 1. Synergy Valuation a. Cost and revenue synergies Managers of an acquiring company anticipate cost savings pretax of $50 million in the first year of the deal and $100 million the next and that thereafter the savings would grow @ inflation, 2%. Marginal tax rate is 30%. The firm must invest $1 billion to achieve these savings and starting in the third year must spend 5% of the pre-tax savings to sustain the rate of savings. As part of rationalization of operations, some assets will be sold generating a positive cash flow of $20 million net of tax in years 1 and 2 and $10 million in year 3. The analyst judges that these costs savings are rather certain, reflecting a degree of risk consistent with the variability in the firm’s EBIT. Accordingly, the analyst decides to discount the cash flow at the firm’s cost of debt of 6%. The merger will expand revenues through cross-selling of products, efficient exploitation of brands and geographic and product line extensions. They forecast revenue growth of $100 million in the first year and $200 million in year 2 and thereafter. The COGS underlying these new revenues is 45% of the revenue. This forecast s in constant dollar terms and needs to reflect expected inflation of 2% p.a. To achieve these synergies will require an investment of $400 million initially and 5% of the added revenue each year to fund working capital growth. The target’s cost of equity is 15% b. Financial Synergies Managers believe that a combination...
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...EV/EITDA Ratio to make a comparison between the two companies and average industry. Our estimation will show that both Metcash and Woolworth are undervalued and suitable for investment 1. Overview : Metcash Limited(MTS) and Woolworths Limited(WOW) 3 1.1 Metcash Limited 3 1.2 Woolworths Limited 3 2. Metcash DCF valuation within FCFF approach 4 2.1 Weighted average cost of capital 4 2.1.1 Cost of equity 4 2.1.2 Cost of debt 4 2.1.3 Capital structure analysis 5 2.1.4 Effective tax rate analysis 5 2.2Estimation of FCFF 6 2.2.1 Growth rate expectation 6 2.2.2 FCFF and present value 6 3. Woolworths Limited DCF valuation within FCFF approach 7 3.1 Weighted average cost of capital 7 3.1.1 Cost of equity 7 3.1.2 Cost of debt 8 3.1.3 Capital structure analysis 8 3.1.4 Effective tax rate analysis 9 3.2 Estimation of FCFF 10 3.2.1 Growth rate expectation 10 3.2.2 FCFF and present value 10 4. Relative Valuation 11 4.1 Price Earnings Model (P/E Ratio) 11 4.2 Price to Sales Model (P/S Ratio) 13 4.3 Enterprise Value to EBITDA Multiple 14 5. Summery and recommendation 15 6. Reference list 17 1. Overview : Metcash Limited(MTS) and Woolworths Limited(WOW) 1.1 Metcash Limited Metcash Limited...
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...JB Hi Fi Limited(JBH) | April 17 2011 | The following document is a complete valuation JBH based on DCF and Relative Valuation. All input justifications are provided and a final recommendation is presented. | | Business Summary JB Hi Fi (JBH) has experience unprecedented growth in the past few years in excess of 10% despite the Global Financial Crisis and weak consumer spending environments. JBH is likely to continue its strong growth (although below expectations) through a combination of recovering market conditions, a new era of smart products and with official interest rates likely to be placed on hold by the RBA until the end of 2011. (A) CHOICE OF MODELS ------------------------------------------------- 1. Discount Models Why FCFF Discount Model? DDM would not be a suitable model because JBH paid dividends which are significantly greater than or lower than FCFE to the firm between 2006 and 2010 thereby underestimating or overestimating the value of JBH (dividends less than 80% of FCFE or greater than 110% FCFE) . The debt to equity ratio has been volatile declining from 82.90% in 2003 to 23.73% in 2010 with a spike of 120.96% in 2006. Estimating future debt issues and repayments will prove to be difficult given that changes are expected because JBH has raised their senior debt facility by $105 million expiring by 2014 possibly to finance the roll out of up to 193 new stores by 2014 as well. The recent stock repurchases of $173 million and possible future...
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...heals looking to close a deal with Avantjet Corp. These corporations have also made offers to lease their product to Avantjet, only adding more pressure to Primus Automation to offer a leasing deal that can keep Avantjet as a long-term customer. Issues Primus Automation had never before offered leasing and was unfamiliar with the actual workings of leasing arrangements. Fortunately its parent company has extensive leasing expertise and chose to assist Baumann in his research. To analyze the best deal for Avantjet, Baumann needed to create a leasing model with NPV and IRR computations, however Baumann is unsure of Avantjet’s tax bracket, and can only assume that its tax bracket is lower. To help resolve any assumption issues there, Baumann decided to run some sensitivity analyses with a zero marginal tax rate, this prevents Avantjet from fully exploiting tax savings on interest and depreciation. The issue that this all keeps...
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...Malthus: productivity grows in a linear way. Population grows exponentially. B: population growth outpaces productivity growth. That’s when famine comes in place, people fight over food etc. So after a while, population goes down again, until pop. growth equals productivity growth (C). But when Malthus (a philosopher) came up with this, it was just before the industrial revolution. Population increased quicker than productivity. The land reforms passed in the UK, who in the beginning fostered prod. growth but esp. pop. growth would eventually lead to the industrial revolution. That prod. growth was that important, that the Malthus effect never really occurred in the UK. Carlyle: a philosopher who coined the term ‘the Dismal Science’ (dismal as opposed to gay). If the Malthus effect were true, then increasing productivity, efficiency, would be a moral duty. One view: efficiency is all we should worry about. Other people will say that growth is not a moral duty, but redistribution, solidarity is. Why? -Darwinian evolutionary argument: it fosters the growth of human population quicker. This is what the Left in America uses as an argument. -there’s no level playing field/opportunities -religious argument? -insurance mechanism (bad luck): but this only works if you work in group. We want to insure ourselves against bad luck. -hedonistic welfare argument: people feel better when they don’t see other people suffer. People care about each other. Efficiency or solidarity...
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...Keynesian Economics, Helping the US Economy Keynesian philosophy states that in order to manage economic downturns, government intervention in the economy is imperative. It was Keynesian Economic Philosophy that kept America out of another depression during the Great Recession due to the fiscal and monetary stimulus (Seidman 32-53, 22p). By examining the government’s need for spending money on welfare, cutting taxes, regulating and monitoring the financial markets, and government spending on military, America sees how a Keynesian approach is a necessity. The American Government needs to continue using the Keynesian model in order to enhance the performance of the economy. Keynesian Philosophy provides government assisted programs to those who qualify. One form of assistance is Welfare. Welfare provides benefits and economic assistance to low or no income Americans. With the dismal economy, there are now over 100 million people on welfare according to the Census Bureau; and this doesn’t include those receiving Social Security or Medicare (GOPUSAStaff). Food Stamps are one of many divisions of welfare. The food stamps program, also known as the Supplementary Nutrition Assistance Program (SNAP), helps low or no income citizens buy food. There are over 46 million people on SNAP as of June, 2012 (Luhby). That is more than one in seven Americans and more than 25% of eligible Americans do not participate in the food stamps program. There are millions of low-income seniors struggling...
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...future prospects for short-term gains. 3. The key advantage of separating ownership and management in a large corporation is that it gives the corporation permanence. The corporation continues to exist if managers are replaced or if stockholders sell their ownership interests to other investors. The corporation’s permanence is an essential characteristic in allowing corporations to obtain the large amounts of financing required by many business entities. 4. A sole proprietorship is easy to set up with a minimum of legal work. The business itself is not taxed. For tax purposes, the income of the proprietorship is treated as the income of the proprietor. The disadvantages of a proprietorship are unlimited liability for the debts of the firm, and difficulty in raising large amounts of capital as the business grows. http://shaikhwaqar.blogspot.com 1-1 A partnership has the same tax advantage as the proprietorship. The...
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...Problem #1: (Winter 2013) Salvage Value = $43,000 tax basis $30,000 tax rate = 30% Presented and discussed in class on Feb. 12, 2013: http://10.101.116.223/F435/W13/F435All4Feb12.html Problem #2: (Winter 2013) Salvage value = $28,000 tax basis = $19,000 tax rate = 30%. Presented and discussed in class on Feb. 12, 2013: http://10.101.116.223/F435/W13/F435All4Feb12.html Problem 3: (Winter 2013) Salvage Value = $84,000 tax basis $92,000 tax rate = 30% Presented and discussed in class on Feb. 12, 2013: http://10.101.116.223/F435/W13/F435All4Feb12.html Problem #4: (Spring 2014) Machine costs $50,000 now Depreciation over a 5-year MACRS life Three years from now, we will sell this machine for $11,000. What will be the ATSV of the machine in three years? 34% Presented and discussed in May 7, 2014, class: http://10.101.116.223/F435/S14/F435All4May7.html Problem #5: (From Quiz #3-B, Fall 2014) initial cost = $10,417,000.00 expected salvage value in 10 years= $3,260,000 marginal tax rate = 34% 15-year MACRS depreciation Problem #6: (From class on Nov. 4, 2014, when preparing for HW#5) Old Machine: marginal tax rate = 34% if sold now, salvage value = $4,000 net book value or tax basis = $2,100 if sold in 4 years, salvage value = $2,500 If kept, then depreciation will be: time depr(old) 1 $300 2 $200 3 $150 4 $100 Presented and discussed in Nov. 4, 2014, class:...
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