Chapter 2

Chapter 2
Ryan Jobe
Chapter 2
Problems 1–11
1. An investor recently purchased a corporate bond that yields 9%. The investor is in the 36%
combined federal and state tax bracket. What is the bond's after–tax yield?
Corporate Bond yield is 9%
The after tax yield is the return after taxes are deducted.
Therefore the bonds after tax yield = 9% (1–T) = 9% (1–.36)
Or 5.76%
2. Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal
risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds?
You want the rate that equals the municipal tax exempt yield to the corporate after tax yield. 8% (1–
T) = after tax corporate yield 6% = municipal tax exempt yield ... Show more content on
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Assume the firm receives an additional $1 million of interest income from some bonds it owns.
What is the tax on this interest income?
Tax =.35 ($1,000,000) = $350,000
c. Now assume that Wendt does not receive the interest income but does receive an additional $1
million as dividends on some stock it owns. What is the tax on this dividend income?
Tax = .35 (.30 * $1,000,000)
Tax = .35 ($300,000)
Tax = $105,000
9. The Shrieves Corporation has $10,000 that it plans to invest in marketable securities. It is
choosing among AT&T bonds, which yield 7.5%, state of Florida municipal bonds, which yield
5% (but are not taxable), and AT&T preferred stock, with a dividend yield of 6%. Shrieves's
corporate tax rate is 35%, and 70% of the dividends received are tax exempt. Find the after–tax rates
of return on all three securities.
The after tax yield on the Florida Municipal bonds = 5%

The after tax yield on the AT&T Corporate binds = 7.5% (1–.35) = 4.875%
After tax yield AT&T preferred: $1,000 of preferred
Annual Dividend: $1,000 * 6% = $60 $60 * 70% = $42 is exempt from taxes
$60 – $42 = $18 is taxable, your tax is $18 * .35 = $6.30
Net after tax dividend = $60 – $6.30 = $53.70
Your after tax yield on of AT&T preferred = $53.70 / $1,000 = 5.37%
AT&T preferred stock is the best alternative
10. The Moore Corporation has operating income (EBIT) of
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Essay On Federal Income Taxes
In the United States, the top one percent received about 20 percent of the overall income for 2016.
This creates an uneven distribution of income causing Americans to argue about whether or not the
wealthy should pay more in federal income taxes. One side of the argument is that the wealthy make
a huge portion of the nation's income; therefore, they should have higher tax rates. The other side
argues that wealthy Americans already pay their fair share of taxes by paying nearly 40 percent and
should not be forced to pay more. These arguments both use compelling evidence to make their
claims; however, a solution could be reached by increasing the tax rate of the top one percent by
only 10 to 20 percent.
Over many decades Americans have ... Show more content on Helpwriting.net ...
Americans that are in favor of increasing the tax rate believe that it will not reduce entrepreneurs or
celebrities desire to be productive (Walsh). Americans that support higher taxes on the one percent
believe that this will help contribute large amounts of money to the federal government. According
to Patricia Cohen, in a New York Times article, she claims that the top .1 percent of Americans have
an average income of about $9.4 million. If the government were to raise taxes to 45 percent on the
top .1 percent this would produce about $109 billion in revenue in the first year (Cohen). The federal
government could use this money for education, health care programs, and social and income
security. Taxing the top .1 percent creates a significant revenue increase, but taxing the top one
percent at 45 percent would create about $276 billion in revenue (Cohen). This tax rate will bring in
a sizable increase which is why many Americans believe that the top one percent should have a
marginal tax rate of 90 percent. Although many Americans believe the top one percent should have
higher tax rates there are also many people who believe that the wealthy pay more than their fair
share of taxes.
Many people believe that because wealthy citizens have more money they are not paying their fair
share in taxes; however, this is quite the opposite. According to an article by Jason Russell, he
claims that the top one percent pay

Corporate Income Tax In The United States
Corporate income tax is one of the highest taxes in the United States, and for several beneficial
reasons. It is an impertinent source of federal income, a crucial backstop for personal income tax,
does not create jobs, and as seen from the past, creates higher taxes in the future. To begin, "the
corporate income tax is the third highest source of federal revenue" in the United States ("How does
the corporate income tax work?"). Federal revenue is used to aid the government financially, in
instances such as Medicare and Medicaid. Contrary to popular belief, there is no flat–rate tax on all
businesses, meaning that all corporations pay the same tax rate. Instead, a corporation's marginal tax
rate can be anywhere between fifteen to thirty–five ... Show more content on Helpwriting.net ...
These tax reforms can be seen during the 1980s with the Ronald Reagan Administration. Ronald
Reagan and his "Reaganomics", as the media called it, was a process of cutting taxes, including
large cuts to corporate income tax, to stimulate business and the economy (59b.). Cutting taxes on
the upper class of the United Stated was originally thought to drive business owners to hire more
workers and produce more and better products in the global trade market. However, this resulted in
a deep recession in the early 1980s (59b.). Instead of sparking business and increasing the United
States' place in the global market, it created large inflammation and higher interest rates (59b.). As
for global trade, the price of exports decreased while the cost of imports increased due to drastic
change in value of the American currency (59b.). The ideology of "Reaganomics" and lowering
taxes ended in disaster for the U.S.

U.s. Politics : A Progressive Tax System Essay
Since the passage of the 16th Amendment in 1913, taxes have been a major issue in United States
politics. Many Americans, especially between major political parties, have had polar views of the
level of taxation that should be implemented. Taxes are the main source of revenue for the
government and states. Every individual citizen and corporations have the obligation of paying
several different types of taxes that range from income taxes to tariffs. In the United States, there is
a progressive tax system which allows for each income level to have its own level of taxation.
Historically, the Republican Party has advocated lowering taxes and the Democratic Party has
advocated tax increases. This is no different in the current 2016 election, where each candidate has a
tax policy that aligns with their party's views. Both Donald Trump and Hillary Clinton have put
forth tax plans that they believe will grow the economy and help the American people. I advocate
the cutting of taxes for all Americans, to put money in the hands of the people, ensure that money
will circulate, and bolster our sluggish economy. The argument of taxation is always brought
forward in presidential races. It is a major point that can heavily influence the opinion of voters and
their support for a candidate. Throughout the history of the United States, the common themes of
Republicans lowering taxes and Democrats raising taxes have prevailed. Although these tax plans
don't always perfectly fulfill party

Income Tax System In The United States
In the early years of our nation, the federal government levied very few taxes. They got by with just
the taxes from alcohol, carriages, and some basic household goods like sugar and tobacco. Sales
taxes were placed on various luxury items when we went to war against Great Britain in 1812 to
cover the costs. In 1817, with Great Britain defeated, Congress did away with all internal taxes and
used tariffs on exports to fund the government. In 1861, to raise funds for the Civil War, Congress
passed a bill assessing a 3% income tax. Evidently misery loves company and the Confederate states
decided to follow suit and enact their own version as well. By the time the war was over, in 1872,
the populace had begun to show their displeasure with an income tax and the political class
eliminated it yet again. Then came the panic of 1893 and the income tax returned. As it turned out,
this 2% tax on incomes over $4000 (that President Grover Cleveland called unconstitutional) started
a chain of events that would eventually culminate in a constitutional amendment and our current tax
system. ... Show more content on Helpwriting.net ...
Surely, a system with this type of origin isn't the only option, or is it? T. Coleman Andrews,
Commissioner of the Internal Revenue from 1953–1955, had this to say, "The income tax is
fulfilling the Marxist prophecy that the surest way to destroy a capitalist society is by steeply
graduated taxes on income and heavy levies upon the estates of people when they die...I believe that
a better way to raise revenue not only can be found but must be found, because I am convinced the
present system is leading us back to...tyranny." So why do people disagree? Do we have any
alternative? In fact, we

The Issue Of State Income Tax
The long–standing issue of states taxing military member's income on top of federal income tax has
a deep rooted resentment in today's military. This issue has many paralleling reasons and different
ways it can be portrayed. However, the taxation of military income on the state level, wherein the
member might not possibly live in the state, is one of many disappointments in today 's society of
the treatment of active and former military members. This is not just an issue solely pertaining to the
statutes of state income tax, it is also a matter of principles. Principles are what this nation was
founded upon, the unalienable rights of life, liberty, and the pursuit of happiness. Furthermore to
build on that, this issue is one of many having to deal with the direct treatment of military members.
Lest not forget who protects the country and also asks little in return. That is why it is a matter of
principle, America is at a crossroads in the world today. With the American involvement in the wars
in Iraq and Afghanistan waning it is time to shift the focus to fixing certain issues at home. The
recent Department of Veterans Affairs scandal was a huge disappointment, not to mention the wide
margin of income disparity between military and private sector jobs. In the past there have been
issues with the proper way to tax military income on the state level. In 1976, John H. Bowman,
wrote an article attempting to bring to light these complications, and also certain restrictions on

The State Of Texas Does Not Have A State Income Tax. States
The state of Texas does not have a state income tax. States collect taxes to generate revenue to
operate. Texas collects the necessary funds from property and sales taxes. As of 2014, there are only
seven states that do not collect an individual income tax. The other six states are Alaska, Florida,
Nevada, South Dakota, Washington and Wyoming. Tennessee and New Hampshire have a limited
tax on individuals, taxing only dividends and interest income. The lack of individual income tax is
protected by Article 8 of the Texas State Constitution, which limits potential tax in the future as
well. Texas funds itself through a 6.25% sales tax, taxes on motor vehicle sales and fuel, and taxes
and royalties on oil and natural–gas production. Texas has ... Show more content on Helpwriting.net
...
In states without state income tax, higher sales, property and other assorted taxes can exceed the
annual cost of a state income tax. Texas is one of seven states that do not levy an individual income
tax. The Tax Foundation, a conservative–leaning research group, ranks Texas ninth–best on its State
Business Tax Climate Index, largely because of the state's lack of an income tax. On three of the
foundation's other major rankings – property taxes, sales taxes and corporate taxes – Texas ranks in
the bottom 20 states. Texas does not have a statewide property tax, but local property taxes remain a
crucial complaint among businesses and homeowners. (Terrence, 2002) The main benefit is that
states with no income tax become a beacon for growth. They 're better at creating jobs and keeping a
core of young, educated workers from moving to other states. The issue is undoubtedly
controversial. Public opinion usually swings with the size of one 's paycheck and the role people
think governments should play in shaping society. Texas has an above–average sales taxes, and
Texas also has higher–than–average effective property tax rates. Cutting the income tax will boost
take–home pay for everyone. It 'll make the state more attractive than its neighbors, creating jobs,
drawing new businesses, and sparking an influx of talented workers.
Conclusion So, without revenue from income tax, these states pay for the basic functions of
government by their citizens who eat, wear

Amendment 16: Income Tax In The United States
Amendment 16 – Income Tax
The 16th Amendment of the United States Constitution states, "The Congress shall have power to
lay and collect taxes on incomes, from whatever source derived, without apportionment among the
several States, and without regard to any census or enumeration."
It is one of the amendments Americans despite the most, because everyone would like to earn
money and to be able to keep all of it. In the United States of America, federal income tax in
imposed not only if you are a citizen, but also if you are a resident. Based on the income of the
taxpayer, the tax rate ranges from 0 to 35% of one's income level. The amendment specifies that
people are taxed on all income; you can be charged on money earned from working a job, ... Show
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It had usually been during war time; the income tax was the first peacetime income tax. During the
War of 1812, Secretary of Treasury Alexander J. Dallas made the first demand to levy an income
tax, but it was never put into effect. During the Civil War, the Revenue Act of 1861 was ratified. At
first, anyone earning more than $800 would pay a tax of 3%. Eventually, people making more than
$600 would have to pay up to 5%. This income tax stopped in 1866, after the war ended. Before the
16th amendment, there were only excise taxes and custom duties. There were also federal taxes,
such as taxes on imports, liquor, tobacco, and other related goods, as well as state taxes, such as
poll, real estate and sales taxes. But income taxes were a more stable source of

Reforming The United States Income Tax
Reforming the United States Income Tax
Ryan Sauer
Wayland Baptist University
Abstract
In January of 2005, President George W. Bush appointed a bipartisan committee to propose new
income tax policies; they were referred to as the "President's Advisory Panel on Federal Tax
Reform". The goal of the panel was to advise new options in an attempt to make filing of the United
States personal income tax simpler. The made a statement about the difficulty that normal citizens
have when filing their tax returns, "For millions of Americans, the annual rite of filing taxes has
become a headache of burdensome record–keeping, lengthy instructions, and complicated
schedules, worksheets, and forms – often requiring multiple ... Show more content on
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One of the main points of interest for the panel was decreasing the burden on low–income
households. Families and small businesses are heavily affected by the alternative minimum tax
(AMT), which is secretly imposing a plethora of regulations on them that they are unaware of. The
AMT was established in 1969 in order to target high–income taxpayers who were avoiding paying
all of their taxes through the many loopholes. Since, the AMT has been extended to catch the
middle–income families. It will "catch" 4 million people this year and over 20 million people next
year trying to avoid paying some of their taxes. "Some projections suggest that by 2015, as many as
50 million taxpayers, or about 45 percent of all taxpayers who pay income tax, will be paying
AMT."(Advisory Panel, 2005) Many of the nations highest earners are not touched by the AMT
while some middle classed families are required to compute their taxes twice although they have not
committed any form of tax avoidance. They are also restricted from filing certain exemptions that
could be used by majority of the population. "As one of our

Why The Rich Should Pay More Taxes
Taxation rate is a very controversial topic in America. Many people like Mark Rosenfelder, Author
of Why the Rich Should Pay More Taxes, believe that the more you make the more you should be
taxed. They justify this by saying that Upper class, well–to–do individuals take more from the
government. They say because wealthy people have more, they have more to lose; thus they require
more protection. Many believe that a flat tax, a tax in which all citizens pay equal tax regardless of
their income, is unfair. Really? Taxing someone because they work hard and make more money
seems to make less sense. Raising the tax rate just because they work hard and have more than other
people isn't right. The wealthy upper–class citizen did not make the lower class poor and shouldn't
be taxed heavily to support them. In his essay Rosenfelder focuses his attention on how to bleed the
wealthy for their money through a progressive tax.
James Madison Declared, "The apportionment of taxes on the various descriptions of property is an
act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in
which greater opportunity and temptation are given to a predominant party to trample on the rules of
justice." In this quote James Madison states that the appointment of taxes must be completely
impartial. In other words, everyone should be equally taxed. Also, Madison continues to state that
the legislative tax offers a dangerous opportunity to distort justice. This

Acc 553 You Decide
Memo To: John & Jane Smith From: Date: Re: Memo summarizing various tax issues 1. John
Smith 's tax issues: Issue a) How is the $300,000 treated for purposes of federal tax income? John
Smith's earned income of $300,000 will reported as gross income either on Schedule c of the
individual return or as gross income on the LLC return. As a result of the variance in the state laws
as to whether or not a single person LLC can report on a business return is the reasons why it could
be either reported on the Schedule C or LLC. Some states that do not allow the separate reporting
see the LLC as meaning not to be reported separately from the individual. Issue b) How is the
$25,000 treated for purposes of federal tax income? ... Show more content on Helpwriting.net ...
She can use Schedule C that is part of the Form 1040 in joint filing. Separate can also mean LLC
which does report separately. Tax on the income will be part of their joint return, whether using a
Schedule C or LLC. Issue e) What tax benefits would John realize if he invested $15,000 in Jane 's
jewelry making? Looking at John's income, there would be no tax benefits. Jane, however there is.
Using the $15,000 for purchasing equipment could produce tax benefits that would become part of
their joint return. John would benefit indirectly from his investment in Jane's business, but Jane
would have to use the fund for deductible purposes. If the funds were to just stay in the bank
account, no benefit would come from that. Issue f) Can Jane depreciates her vehicle or jewelry–
making equipment? How? Jane can depreciate her vehicle by declaring the depreciation and auto
expense to the extent of the business use based on the mileage. Jane could keep a record of her miles
use for her business and use the standard mileage rate. The equipment can be depreciated under
Section179. This allows for a full write off in a year of acquisition. Another way the equipment can
be depreciated is using the MACRS depreciation. This allows a systematic write off of equipment
based on the type of assets. 3. John and Jane Smith tax issue: Issue a) Should John and Jane file
separate or joint tax returns? No, John and Jane

Tax Taxes And Income Taxes
Everyone gets frustrated with income taxes and everyone complains that they are paying more than
enough, but who really pays more in federal income taxes? Having a progressive tax system;
meaning that the more money you earn, the more you will have to pay in taxes; would lead to the
rich paying for most of the taxes and not the poor. Unfortunately, many people do not realize some
of the problems with the tax system itself that offsets the balance as well as the results when it
comes to taxes. There are many unseen things when looking at no more than just the statistics of
who pays the most in taxes. Anything from the tax rates, the difference between federal and
individual income taxes as well as state taxes can create a problem when ... Show more content on
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"Many taxes are regressive, meaning they take a larger share of income from poor and middle–
income families than they do from the rich." (2015, 3) Along with the federal income taxes,
Americans pay for state and local taxes also, seven states are excluded from the state taxes. Federal
income taxes take up the majority of what Americans pay in taxes, calculating for two–thirds of all
taxes paid by Americans. Altogether, forty – three states levy individual income taxes, forty – one
tax wage and salary income, two states specifically tax dividend and investment income while seven
states levy no state income taxes.
The seven states that have no state income taxes includes: Alaska, Florida, Nevada, South Dakota,
Texas, Washington and Wyoming. (Fact Check, [3]) Federal income tax and local sales taxes would
be the only source of taxes these states would need to pay. Unlike the federal income taxes, the state
taxes are regressive meaning that they take more income from low and middle–income families and
individuals rather than from the wealthy. Three of the most regressive states for state income taxes
are Washington as number one, Florida in second and Texas ranked number three with the low–
income families paying twelve and a half percent and the wealthy paying only three percent. Taxes
that are truly causing a problem would be the state income taxes, which are

United States 's Income Tax Treaties Essay
The United States has income tax treaties with a number of foreign countries. Under these treaties,
residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt
from U.S. income taxes on certain items of income they receive from sources within the United
States (IRS, 2015). These reduced rates and exemptions vary among countries and specific items of
income. The US has bilateral income tax treaties with many global trading partners. Under the terms
of those treaties, a company that establishes a taxable presence in a foreign country is understood to
have created a permanent establishment. With few exceptions, a treaty must exist between the US
and the foreign country for the concept to apply. If you are treated as a resident of a foreign country
under a tax treaty, you are treated as a nonresident alien in figuring your U.S. income tax. For
purposes other than figuring your tax, you will be treated as a U.S. resident. If you are a resident of
both the United States and another country under each country 's tax laws, you are a dual resident
taxpayer. If you are a dual resident taxpayer, you can still claim the benefits under an income tax
treaty. The income tax treaty between the two countries must contain a provision that provides for
resolution of conflicting claims of residence. On April 30, 1984 the US and People's Republic of
China signed a tax treaty to avoid double taxation and prevent tax evasion. All provisions of the

The Flat Tax System
Taxes are something the people of America have had an issue with since the very creation of this
nation, and it is one of the main reasons the Revolutionary War was fought. The issue of taxes has
morphed over time, and in our current time period, people are debating which tax system should be
implemented. Even though this is a broad topic and a national issue, this paper will only cover the
income tax version of these systems, and which income tax system would be most beneficial to the
state of Texas specifically. Currently, there are three main types of income tax systems, and they are
the progressive income tax system, the flat income tax system, and the no income tax system. By
analyzing research from reputable economists and academic journalists, ... Show more content on
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Also, if the government wanted to raise more revenue through raising income taxes, and there was a
flat income tax system in place, they would have to raise the income taxes for everyone across the
board. Now, let's look back the example from earlier where person one made $50,000 and person
two made $100,000. Remember, they both payed the same percentage of their income in taxes,
which was 10%: person one payed $5,000, person two payed $10,000. Some people will say that
this way of taxation is unfair because the $5,000 means more to person one than the $10,000 means
to person two. Regardless of whether the $5,000 means more to person one than the $10,000 means
to person two is true or not, they are being treated fairly because they are both paying the same
percentage of their income. The flat tax has good points like its simplicity and ability to stimulate an
economy, but it also has weaknesses like its inability to be flexible after implementation and the
possibility of putting even more of a tax burden on lower income families. Let's move on to the third
and final tax system to be covered which is no income

Essay On Individual Income Tax
Individual income tax collection model is different
Classification Income Tax System The United States is the implementation of a comprehensive
income tax system, that is, the wages and salaries, labor remuneration, dividends, bank interest,
self–employed income and partnership income and other federal income tax
Comprehensive income tax system China's current personal income taxes are: income are
determined for different categories of different standard deduction and applicable tax rates.
Ways to pay the tax bills
US taxpayers take the initiative to declare personal income tax.
China withholding agent to declare personal income tax
Different standard deduction unified standard deduction China's relevant tax law provides that ...
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Taxation jurisdiction
The United States has the right to use the proceeds of the enterprise, the jurisdiction of the residents
and the jurisdiction of the citizens, and China has only jurisdiction over the first two. For example,
US companies registered in China after the tax in China still need to pay taxes to the United States,
but the tax in China can be part of the credit; and Chinese companies registered in the United States
after the US duty–free payment to China without tax.
Property Tax
Object of taxation
The United States is the land and housing at the same time levy, China's property tax tax object is
mainly for–profit housing.
Taxpayer
In the United States, the taxpayer of the property tax is the owner of the real estate, the natural
person or legal person who owns the real estate, including the owner of the house, the tenant of the
house, but not the residential tenant. China real estate tax taxpayers are urban, county, town and
industrial and mining area within the scope of the operating property owners or users.
Tax Rate
The tax

Tax Reformation Common Ground
The tax policy in the United States is very confusing. When the tax policy was originally written in
1913 it was four hundred pages. Now, over the past ninety one years, that tax policy has evolved to
over 72,000 pages. Since the tax code has become so lengthy and nearly impossible to understand,
the topic of tax reform has been in the minds of many. Although, most barely think about tax reform
until tax season. It is a controversial subject due to the impact a change in tax code would have on
the American people. The two most popular and widely known stakeholders in this debate are the
two major political parties in the United States, the Democrats and the Republicans. The two parties
share absolutely no common ground on the subject of ... Show more content on Helpwriting.net ...
Garrett 2
For example, if the tax rate is seven percent and one person makes one thousand dollars they would
pay seventy dollars to the government. While someone that only made one hundred dollars would
pay seven dollars to the government; this they may deem unfair.
The common ground the two parties would meet on would be a flat tax. So, any household that is
classified as on or below the poverty line will not be taxed whatsoever. Then the tax amount for
everyone else would be chosen based off of the governments projected spending amount for that
year, and incorporating the idea of reducing the deficit. It would take a lot of work to get
implemented, not only would the idea have to be adopted by both parties, it would have to be
supported by two of the three branches of government. The bill would begin in the House of
Representatives, after being passed there it would move to a vote with the Senate. If the bill
continues to be passed it will move to the executive branch where it can either be signed of vetoed
by the president, although a veto can be overridden with a two–thirds vote from Congress. Once it is
passed the existing tax code would have to be completely thrown out and the flat tax implemented.
But this is not simply a month long process, the timeline for a flat tax to be implemented would
likely be about four years. It is a lengthy process, but one that is well worth the wait.
While only economists can predict how a flat tax would impact

The Pros And Cons Of Texas State Income Tax
Texas is one of seven states that doesn't have state income tax. This doesn't mean Texas
Residents pay less in taxes than the states that have a state tax. All states must generate revenue and
they do so through various taxes including income taxes, sales taxes, and property taxes, just to
name a few. (Longley) Texas has a state sales tax rate of 6.25%, but once you add in taxes from
counties, cities, transit, and special purpose districts, the tax rate reaches 8.25%. (Texas) There are
pros and cons to Texas not having state taxes. Overall Texas still receives a fair amount of taxes by
collecting sales tax and property tax. Most Texans pay more in taxes than places such as
Californians, but rich Texans pay a lot less. That's great for rich ... Show more content on
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Texas does outperform other states in terms of economic growth and population growth. Many
people move to Texas because of the jobs and they do taxes right. (Batheja, 2013) Gov. Rick Perry
believes Texas's performance through the recession is due to lack of income tax. He says "You can
stop trying to figure out how to pay the state income tax, because we don't have one." (Batheja,
2013) The Tax Foundation, a conservative–leaning research group, ranks Texas ninth–best on its
State Business Tax Climate Index, largely because of the state's lack of an income tax. (Batheja,
2013) On the other hand, Texas's high property taxes remains a crucial complaint among business
and homeowners. It's harder for small business to pay their taxes especially if their business wasn't
very profitable. Small business end up using their own personal savings, mortgages, or borrow
money in order to pay their taxes. Having a state tax would benefit small business. Although having
no state tax is accepted by many, it puts a dent on cities and towns. Local debt has increased over the
past decade, in large part to cover the costs for new schools and public maintenance projects.
(Batheja, 2013) The state is pushing projects such as building of highways and roads to cities and
counties. (Batheja, 2013) In 2012, more than 500 lawsuits were from school districts arguing that
our public education isn't properly

Payroll Taxes Essay
Payroll taxes first appeared numerous years ago and have since evolved, grown, and underwent
major changes. Payroll taxes are taxes that are paid by employers and their employees. Payroll taxes
are collected by the federal, state, and local governments to fund certain programs or projects. The
employee's tax proportion is typically deducted from the employee's wages every earning period,
and the employer fraction of the payroll taxes are paid directly by the employer and are based upon
their employee's wages. The amount of payroll taxes that must be paid are required to be reported to
the Internal Revenue Service and the employer's state and local taxing agencies. Smaller businesses
tend to lean towards independent contractors because the business is not required to pay taxes for
independent contractors. Independent contractors are considered self– employed and are responsible
for the employee as well as the employer portion of payroll taxes. Whenever a business falls behind
in reporting payroll taxes or paying the taxes to the IRS, there are consequences. The IRS can attach
a late– payment fee or add a tremendous amount of interest to the original tax payment in addition to
holding one person solely responsible for ... Show more content on Helpwriting.net ...
There are, however, nine states that do not withhold any state income taxes. Those nine states are
Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington, and
Wyoming. Most states withhold taxes based on the federal policy which means the W–4 form will
also be used to determine how much tax to withhold from an employee's earnings. There are also
states that withhold other taxes, on top of state income taxes. An example would be California
because they also withhold State Disability Insurance, which is 0.9% of an employee's gross pay.
The state decides how they withhold state income taxes, and any additional taxes that they want to

The Tax System Of The United States
Taxes are a required aid from individual incomes or business profits collected by the government
that funds certain activities and services is provided by the government for the people. Taxes in the
United States can be originated all the way back to the 1760s. The current tax system the country
has is a progressive tax. A progressive tax is a taxation system where higher incomes get taxed at
higher percentages than those with lower incomes. The tax system that has been proposed that the
economy should switch to is a flat tax. A flat tax is a system where all income would have to pay the
same percentage towards taxes regardless of how much money they make. This has been a major
controversy because of the major impacts switching the ... Show more content on Helpwriting.net ...
Also, as income increases, households have more and more income that is not spent on basic
necessities and thus can afford to pay more taxes, unlike those with lower incomes. In other words, a
progressive tax helps the government gain revenue to support its society. As a result of people with
higher incomes paying more money to the government, access money can go to those people who
can 't afford to help themselves. In addition, it helps create programs for medical services, fund
public education, housing assistance and other welfare programs. This revenue enhances the
opportunities for its lower and middle class citizens (History and Debate of Progressive Tax).
Nonetheless, some conservatives think that progressive tax is socialist wealth redistribution and
state theft because of what the access revenue is put towards. Conservatives also think that
progressive tax is unacceptable because it creates a sense of class warfare, where the poor and rich
don 't get along with each other because of the large gap they have in taxes. They also believe the
current progressive system hurts wealthy business owners because they are the ones who create
jobs, therefore they are vital to the economy and shouldn 't have to pay more because of their
success. Many liberals still believe that the

Tax Cuts And Its Effects On The Economy
In the time of economic hardship, the state plays an important role in stabilizing the market. Some
people believe that cutting tax is the most effective way to stimulate the economy because they
believe cutting tax may create more jobs, provide economic incentives for corporate investment or
entrepreneur entries. Furthermore, some believe that tax cuts are more economically efficient than
other economic stimulating programs such as tax subsidies program. They also argue that high–
income earners overpay tax, and they reason that tax cuts can distribute financial resources more
fairly. Nevertheless, some cast doubts whether tax cuts actually have any impact in economic
development. Others may argue that the lower tax revenues mean less funding for social welfare
programs, which will harm low income earners. Most importantly, tax policies are often
manipulated by high income earners, which do not represent the interest of the majority. The debate
results in extensive research in job growth, economic activity, and national economic growth.
Recent research and evidence suggest that lowering tax may hurt the economy: tax cuts do not
stimulate the economy; tax cuts extend recession; tax cuts increase income inequality.
It is argued by some people that tax cuts serve as economic stimulus, such as it may accelerate job
growth, and provide short–term employment. Shuai and Christine (2013) suggests that corporate tax
cuts can boost job growth (p.191). Using data from the Tax

Comparison: State Income Tax, Oregon vs. Florida
Income Tax, Oregon vs Florida, Comparison and Analysis
Income tax, as defined by thefreedictionary.com, is "A charge imposed by government on the annual
gains of a person, corporation, or other taxable unit derived through work, business pursuits,
investments, property dealings, and other sources determined in accordance with the Internal
Revenue Code or state law." In layman 's terms, Income tax is money taken out of someone 's pay
and given to the government, state, federal, or in some cases both. Some special exceptions apply,
but in the states being covered in this essay, being Florida and Oregon, those exceptions will not
bother us as of right now, although we will look at them later as a point of comparison. Today we
are asking ... Show more content on Helpwriting.net ...
Secondly, what is an answer? Population! Income tax is only collected on officially recorded
income, so what does that have to do with individuals? Whether they work or not. Florida has a
population with higher–than–average retirement rate. About 17.3% of Florida's 18+ million
residents are retired, which is 65 years or older, which is generally considered to be the age one
quits 'working' or employment. This is compared to Oregon with only 13.9% of its 3.4 million
citizens being retired. Along with that, the average age of a Floridian is around 2 and a half years
older (38.7) than that of an Oregonian (36.3). These states, presented in percentages, may seem
insignificant in difference, but presented with raw numbers, they seem much more intimidating.
Florida, at 17.3% or 18 million is estimated at being filled with 3.11 million retirees. That's nearly
the population of Oregon. Let's be glad not everyone in oregon is 65 or older, although it'd be quite a
good investment opportunity for retirement centers. Anyways, with nearly 2 in 10 people being
retired, and therefore not bringing in income, Florida is already sounding like one smart cookie of a
state. Let's further it buy bringing up some other facts. Florida has an unemployment rate of 11.5%,
or around 2.1 million people. Between the unemployed and retirees, Florida has over 5.2 million of
its 18 million not bringing in any wages, and therefore not giving the state any income tax. Although

A Fair System Of Taxation
Since taxes have been collected in the United States, there has been substantial debate about what
constitutes a truly fair system of taxation. After all, "taxation without representation" was the basis
on which the Revolutionary War was fought against England; the new colonies were loathe to
continue to accept a system in which they had to pay taxes that were dictated by a monarchy that
appeared to have less and less interest in fairness. In fact, Great Britain had become completely
engaged in finding ways to earn income based on taxing its colonies. So resistant to the idea of
taxation with the first colonists that the first federal statutes in the United States imposing the legal
obligation to pay a federal income tax were adopted by ... Show more content on Helpwriting.net ...
This suggestion is viewed as an extremely fair response to the problems with the tax code, because it
supports an equitable solution for all taxpayers, regardless of their income level. However, another
proposal that has become popular completely eliminates the current progressive tax code as well as
the idea of a flat tax. The Fair Tax is not a tax on income but instead would replace all existing
income taxes including payroll taxes, with a single consumption tax (Erb.) Discussion about the flat
tax versus the fair tax in comparison with the current progressive income tax highlights a wide
perspective of views about the appropriate way for the government to collect revenue from its
citizens. Supporters of all three configurations make sound arguments to justify continuing with the
current system or adopting one of the two alternatives. The current system, the progressive income
tax, is popular because it is essentially exactly what it sounds like, i.e., the tax rate that anyone pays
rises, or progresses, as income increases. In fact, such a progressive income tax system can be
created even when the rates remain flat through the use of personal exemptions, tax credits, and tax
deductions which essentially change the tax rate that is in effect (Erb.) People tend to like
progressive tax rates because they are a way of raising revenue by taxing people who have the

America 's Fiscal 2017 Budget
While oil represents about 7 percent of Louisiana 's revenue, its budget structure is more complex
than other oil–producing states –– and probably most similar to Kansas in its budget woes,
according to Leachman. Edwards 's fiscal 2017 budget proposal includes dramatic cuts to virtually
every part of state government: higher education, healthcare, the attorney general 's office, and
youth services. Some budget experts trace the start of Louisiana 's revenue problems to the repeal of
income tax increases under what has been termed the Stelly Plan, a restructuring of state revenue
that also called for lowering the sales tax. The repeal came as Louisiana was awash in one–time
revenue, including federal funding to the state to aid recovery ... Show more content on
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As a group, the eight states held balances equaling 33.3 percent of general fund spending. While
Alaska pulls up the average, with balances of 122.5 percent, four additional states also hold balances
in excess of 30 percent of general fund spending (North Dakota, Texas, West Virginia, and
Wyoming). Two states –– Louisiana and Oklahoma –– hold relatively low balances, but both exceed
the 5 percent threshold.9
Louisiana lawmakers thought they were about $30 million short of closing a $940 million deficit in
the budget cycle ending June 30, especially following the Senate 's approval in March of House–
passed legislation to apply the state 's sales and use tax to tangible personal property and other
previously exempt items such as manufacturing equipment. But updated fiscal information appeared
to indicate the state deficit to be in the range of $70 million. Edwards 's veto of some $4.4 million
worth of cuts made the hole even deeper for the current fiscal year –– and widened it to a projected
$750 million next year.
While there can be political joy from cutting state taxes, the bulk of the House 's cuts relied on
shuttering the state Department of Education for the next three months –– an insufficient, politically
unpopular action that forced lawmakers to vote for an estimated $300 million in tax increases just to
bridge the revenue gap from April 1 to June 30. But these increases were far short of enough ––
prompting Edwards to use $128

The United States Should Replace Income Tax
For most Americans dreading Tax time is something we all have in common. We spend many hours
focusing on filling out forms while trying to decipher the instructions and tax regulations. While
completing these forms and submitting them to the IRS we all become fully aware of just how much
money we are actually putting into federal funds each year. This amplified awareness as you may
assume has caused a flood of suggestions on how to improve the way our government should collect
funds. This begins our discussion on whether the United States should replace Income Tax with a
Sales Tax. In the year 2003, we were introduced to a new proposal for replacing income tax with
sales tax, called the Fair Tax Act. This act was introduced by a group ... Show more content on
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One of the largest effects of a move to national sales tax system would have on us, is the change it
would have on people's working and consumption performance. Although, it is currently unclear to
tell if replacing an income tax with a sales tax would cause consumption to rise or fall within the
United States, it
does lead us to weigh out the two primary and opposing powers that show to be at play within this
idea, beginning with the effect it will have on income. Since income would no longer be taxed under
a national sales tax system like FairTax, the way it works would change. Although, the idea of
workers earning more seems great, I however feel this may cause some concern with how much
more workers would be spending as a result of their higher earnings. From my own experiences
when you have more money, you would like to believe your spending wouldn't go up, however that
is easier said than done. So as you may assume the effect on income would suggest that the FairTax
plan could cause consumption to rise.
There is also another example we must focus on when it comes to replacing income tax with sales
tax. For example, if we aren't having to pay income tax than it would obviously be replaced with
sales tax, but if there is a higher tax on purchasing goods, than we

Wage Gap Between The Middle Class And The Upper Class
Introduction
Wage is a topic that is constantly covered in the media. One big issue is the growing wage gap
between the middle class and the upper class. While minimum wage increases are considered a good
method to reduce income inequality, they are controversial since many business owners and
economists argue that they increase the unemployment rate.
Impact of minimum wage on employment
One concern that is commonly mentioned during the debate on raising minimum wage is the loss of
employment as a result of the legislation. A common fear is that small business owners will not be
able to pay their employees and may need to lay off workers In order to keep the business running.
Skeptics were also afraid that large corporations will lower hiring quotas to recoup on the cost of
having to raise employee wages, or that large corporations will lower the pay of other workers to
help offset the cost further. A good place to find evidence on this claim will be to compare Illinois
during the two–year gap between 2003 and 2005.
During these years, Illinois experimented with its minimum wage. At first, Illinois suffered
substantial job losses among private employers during 2003. However, employment increases
during 2004 and 2005 completely negated these job losses, and put Illinois on the same level as
other states that did not increase their minimum wage.
What we can gather from this is that a minimum wage increase may initially lower employment, but
in the long run the

The Progressive Tax System Of The United States Essay
There is an issue that has plagued the United States even prior to the founding of the nation. That
issue is fair taxation. While the American Colonists were being taxed unfairly without parliamentary
representation, average modern Americans are being taxed unfairly without legal representation.
Some hold the belief that the progressive tax code employed by the United States to be fair as the
wealthy pay a higher marginal tax rate. The operative word there being marginal. As the upper class
typically has a much lower effective tax rate since they are able to afford tax attorneys who are able
to find many deductions that average citizens are unaware of. Mitt Romney is a prime example of
low effective rates of taxation. According to CNN Money, Mitt Romney made twenty–one million
dollars in one year, but only paid an effective rate of fifteen percent, which is much lower than the
rate he should be paying. The progressive tax system is one that is littered with loopholes, but those
are only known to those with the means to search them out as the federal tax code spans seventy–
thousand of pages of convoluted text. Not even the highest paid tax accountants will ever read
anywhere near the full volume of tax laws. By the tax code being as long as it is, few are able to
reap the full benefits of the tax code. The level of complicated text is not the only major issue with
the federal tax code. Another issue with the tax code of the United States is the inability to separate

Income Tax In The United States
If you are a working American Citizen, you pay income tax. We are so used to the income tax that
we do not even look at that part of our pay checks anymore. When we discuss our pay with friends
or family we refer to it as our take–home pay not what we actually earn. Next time you receive a
paycheck stop and really look at the details. There is federal income tax, state income tax, and some
areas have local income tax. Do not forget about Social Security tax and Medicare. Now, imagine
that the income taxes were erased from your paycheck. That's a big difference, is it not? Actually
getting the money you earn. That is the reason I am an advocate of the Fair Tax Plan. We get to keep
the money we earn, the government still receives revenue, and ... Show more content on
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As tax time approaches, it's critical to understand which tax deductions are allowable for each
particular individual taxpayer. Basically, the IRS allows a deductions for business use of a home or
residence and it's your responsibility to know exactly what is an allowable IRS deduction and what
is not. You obviously cannot deduct your entire home for business because you live there so follow
the steps below to help you determine what portion of your home is used for business: Determine if
your home is actually being used for business by meeting 2 of the next 3 conditions: Determine if
most administrative and managerial tasks are done from the home. Determine if your home office is
a separate structure. Determine if you regularly meet clients and/or patients at your home in order to
conduct business. Determine which portion of your home is used for business. Divide the number of
square feet used for a home office or home based business by the total number of square feet in your
home. Working at a desk in your den or kitchen a few days a year isn't going to allow you to get the
home office deduction. If that same desk is used on a regular basis and only for business, well then
that may qualify. Determine which expenses are allowable as deductions: rent or mortgage, portion
of utility bills, travel expenses for business, computers used for business, etc. Check

Tax Cuts Argumentative Analysis
Though tax cuts proves to be insignificant in stimulating the economy, some people highly favor tax
cuts as they reason tax cuts will redistribute financial resources more efficiently than governmental
redistributive programs. People favoring tax cuts often criticize that tax is wasted in government
social welfare programs, such as health care and tax subsidies programs. Epstein (2013) argues that
government waste money in social welfare programs without trading off with economic gains
(p.286). He also criticizes government funding as it favors spending over savings and investing (p.
288). Likewise, Kratkze (2010) claims that people often government health care programs give the
false impression that health care is free; therefore, it may lead ... Show more content on
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They may think that tax cuts resolve poverty. However, this point appears to be invalid. Evan and
Mitchell (2012) found that even in fast–growing economy, poverty rate often remains unchanged in
Canada (p.4). Assuming Canada shares a similar political and economic context as the U.S, the
research shows the potentiality that tax cuts may not aim at helping the poor as it has suggested.
Furthermore, Evan and Mitchell argue that tax is helping the poor, by fixing increasing income
inequality (p.1). Therefore, people who believe in social fairness, and income equality should
endeavor taxes rather than try to eschew them with tax cuts.
Research shows opposing opinions and evidence suggesting that tax cuts may either benefit or harm
the economy. Accounting for political bias and favor for high income individuals, the argument for
tax cuts seems to have more flaw. This leads to the conclusion that tax cuts do not have much impact
in economic development. It is also worthy of noting that tax cuts often accompany with longer
economic recession, which suggests major deficits in tax cuts effect. Furthermore, research suggests
tax cuts may be manipulated of those with greater political power, in this case high–income tax

Essay on Tax Reform in The United States
The current tax policy in the United States is very confusing and it is very costly for our government
to administer it. It is in the best interest of our country and its citizens to revise or replace our
current tax policy. While most taxpayers agree that tax reform is necessary for our country the
problem they encounter is the difficulty they experience when trying to understand all the political
terms used when discussing tax reform. This paper is an attempt to help the taxpayers of our country
to better understand the political terminology and gain knowledge about some of the proposals that
have been explored. Like most taxpayers, many politicians also agree that tax reform is necessary in
the United States, but that is ... Show more content on Helpwriting.net ...
The last option that Warren explained was rationalization of the relationships between two tax bases
such as income and social security taxes, state and federal taxes, and federal corporate and
individual income taxes. "Integration of the corporate and individual income taxes has come to
mean eliminating the double burden of the corporate and individual income taxes, where it exists,
and substituting a system in which investor and corporate taxes are interrelated in a manner that
eliminates or reduces the foregoing distortions. The goal is to produce a uniform levy on capital
income, whether earned through corporate enterprise or not" (Warren 9).
One popular method of tax reform that some of the experts in this field think is worth considering is
implementing a flat tax also known as a consumption tax. J. D. Foster says that "any tax with a
single tax rate could be considered a flat tax." An article from the website Tax Policy Center defines
consumption as being "income less savings" (Gale). The major difference between an income tax
and a consumption tax is the way savings are taxed. With an income tax all income is taxed when it
is earned and again when interest is earned on any savings. Critics of an income tax say that this is
double taxation and

Is A Flat Tax Really Better Than Our Current Progressive...
Is a flat tax really better than our current progressive tax system? It is currently being contemplated
as an alternative solution to the ever–increasing tax debacle in the United States. With such a
significant and potentially life–changing event on the rise, it is vital to address the concerns
involved. If implemented, the flat tax system would cause a loss of revenue for the government,
greatly reduce IRS jobs, and negatively impact the lower income families.
First, to understand the effects of a flat tax and how it compares with our current system, it is
important to know what it is. "A flat tax is a tax system, which refers to a tax on household income,
taxes at a uniform rate, regardless of income level" (Meehan, 2016). This means that every
individual in the nation would pay the same rate regardless of what they earn. A progressive tax, on
the other hand, is based on an individual's income and when their income increases, so do their taxes
(The Economic Times, 2016). Under this system, the rich pay more and the low–income earners pay
less. At present, this has caused some very big issues including a widening gap in our social ladder
and an uproar over where the majority of the country's wealth resides. These problems are the
reason that government officials are seeking out new options. However, the flat tax alternative is
less progressive and for many reasons.
Even though the flat tax system is fair and all parties pay the same percentage, the impact that it will

The Case For A Progressive Tax
The case for a progressive tax: from basic research to policy recommendations
Authors: Peter Diamond and Emmanuel Saez (2011)
The central of issue in policy making is the fair distribution of the tax burden; the tax should
minimize the social welfare of the individual's subjects to his or her own budget constraints. A large
academic literature has developed models of optimal tax theory to cast light on the problem of
optimal tax progressivity. This article has tried to explore the path from basic research results of
optimal tax theory to formulating policy recommendations. Further it has cast light on taxation of
very high earns, second the taxation of low earners and third, taxation of capital income.
The optimal tax theory typically suggests that the tax system should maximize a social welfare
function subject to a government budget constraint, taking account that individuals respond to taxes
and transfers. Redistributive taxes and transfers can negatively affect incentives to work, save and
earn income but created the classical trade between equity and efficiency which is core problem in
optimal income tax. Optimal tax analyses maximize social welfare as a function of individual
utilities and sun of utilities in utilitarian case. Further optimal income tax theory is first a normative
theory that shows how a social welfare objective combines with constraints on resources and
behavioral response to tax policy recommendation. Firstly, the problem at hand, secondly, the

Progressive Tax Vs Regressive Tax
"The subjects of every state ought to contribute towards the support of the government, as nearly as
possible, in proportion to their respective abilities; that is, in proportion to the revenue which they
respectively enjoy under the protection of the state."
A progressive tax is a tax where the tax rate increases as your income increases. The progressive tax
takes a larger percentage from the income of high–income earners than it does from low–income
individuals based on the concept of ability to pay. By dividing taxpayers into categories based on
income level it then allows the wealth of the country to be equalized.
When individuals envision progressive tax systems they are usually referred to the income tax that is
due on April 15th of every year. However, progressive taxes comes in various forms, such as estate
taxes or luxury taxes on consumer goods.
Estate taxes require higher net worth individuals to pay an additional tax on their property when
they die. If the value ... Show more content on Helpwriting.net ...
However a regressive tax is the exact opposite. Higher–income taxpayers pay a smaller percentage
of their income than lower–income taxpayers because the tax is not based on ability to pay. A
regressive tax is generally a tax that is applied uniformly. This means that it hits lower–income
individuals harder, such as sale taxes. When a regressive tax is based on consumption such as a sales
tax, it can introduce an element of freedom of choice. However, only the consumers whom choose
to use the particular good or service must pay the tax that follows, and those who consume more
frequently most pay more taxes than the occasional users. However, consumers have some measure
of control of how much they pay in taxes. For instances, if the consumer wishes to reduce what they
pay in taxes, they can cut back on or eliminate the use of that particular good or

State Income Tax In Texas
Many people love the fact that Texas does not have to pay state income tax. Although it may have
some advantages it also has a great deal of disadvantages. Texans are suspicious when it comes to
changing tax laws and would rather keep it how it is now than having the government raise the taxes
and change the system up. Texas is one of the worst states with education because it has a difficult
time funding schools. Instead of state tax, Texas has sales tax and property taxes to help pay for
education and government bills. In the school year of 2012 and 2013 Texas educated 5,058,939
students, paid for 327,420 teachers, bused students over 335 million miles, provided 890 million
free or reduced price meals, and opened up 192 new schools. All ... Show more content on
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Property tax has five main rules in the Texas Constitution. The first rule is "Taxation must be equal
and uniform" which means all property must be taxed and priced equally. The second rule is "all
tangible property must be taxed on current market value." Third, "Every single piece of property
must be taxed" the only exception is if the state law provides an exemption for the property. The
Firth rule expresses that property owners may increase the property appraised value. Lastly every
single property in a county requires at least one appraised

Kazakhstan and United States Income Tax Treaty
Kazakhstan has concluded 43 double taxation treaties with different countries around the globe and
one of them is the United States. Kazakhstan and the United Stated singed an income tax treaty and
protocol on October 24, 1994. The parties initialed the proposed convention and protocol during the
first half of 1993. Although similar to the U.S. – Russia income tax treaty, the new Kazakh accord
contains some distinguishing features.
Creditable taxes
The new agreement applies to the Kazakh on profits and income provided by the laws "On Taxation
of Enterprises, Associations and Organizations" and "On the Income Tax on Citizens of the Kazakh
SSR, Foreign Citizens and Stateless Persons." Treaty article 23, Relief From Double Taxation, states
... Show more content on Helpwriting.net ...
Such gains will be deemed to arise in the other state to the extent necessary to avoid double taxation.
If one contracting state introduces such a tax, it is required by the protocol to inform the other state
in a timely manner and consult as to the need to amend the treaty to provide for non–recognition
treatment. The protocol anticipates the possibility of future legislation, as neither country imposes
taxes on foreigners' capital gains.
The phrase "tax sparing" appears in the protocol. The protocol states that both sides agree that a tax–
sparing credit will not be provided in article 25 at this time. Treasury officials evidently were not
adverse to saying that the convention will be "promptly amended to incorporate a tax sparing credit
provision" if the United States amends its tax laws concerning the provision of tax–sparing credits,
or if the United States negotiates a tax–sparing provision in a future tax convention with another
country.
Permanent Establishment
The proposed treaty's permanent establishment provision provides that a building site, installation,
construction or assembly project–including an installation or drilling rig for exploration or
exploitation of natural resources– will constitute a permanent establishment if the site, project, or rig
operates for longer

The Tax Rate Of The United States
1. Imagine a friend says that he doesn't want to take a job that pays slightly more money only
because he will be bumped into the next tax bracket and end up taking home less income after taxes.
Based on the video Engager you watched in Unit 2, how would you advise this friend? Define
marginal tax rates. Then, explain why tax rates in the United States were designed to be marginal.
➢ A progressive tax, which the friend would be under in this situation, is one in which those with
the highest incomes pay the higher tax rate (Video Engager 2). I would advise this friend to take a
closer look at the situation; just because he is earning more money does not necessarily mean he will
lose more of what he earns to taxes. Instead, different safety features are built into the process to
ensure that those who earn more are not prevented from working harder or getting a promotion. For
example, those with a higher income can be incentivized through tax breaks from giving to charity
or even saving for retirement (Video Engager 2). These benefits encourage those in the higher
income brackets to continue to be motivated to earn more. In addition, the tax rates on higher
income are marginalized. Marginal tax rates mean that a high–earner will only pay the higher tax on
the portion of money that is above the tax bracket. In other words, everyone will pay the same
percentage of tax on the first bracket of income, any income above that bracket will be taxed at a
slightly higher rate, and

The Issue Of Taxation Of The United States Essay
Benjamin Franklin once said, "in this world nothing can be said to be certain, except death and
taxes." Taxation has always been a hot–button issue in the United States, as it was one of the
primary reasons the United States revolted from the British. The media have once again turned its
attention to the issue of taxation, but primarily on the increasing of taxes solely on upper–class
citizens. The United States currently employs a progressive tax rate, which means that the upper
class already is liable for a higher percentage of taxes. During the current presidential campaign,
each of the candidates has their own unique idea of tax reform. Some of the candidates' tax plans cut
taxes for all through the change to a flat tax rate, while other plans do quite the contrary and raise
taxes for all. The candidates who are favoring the increase of taxes on the wealthy are attempting to
enact laws, which increase funding for government programs, attempt to redistribute the wealth to
the lower class, and eliminate the debt of the United States. However, the candidates who are
attempting to enact a flat tax rate are attempting to eliminate outdated government programs and to
help to increase jobs. A higher tax rate on the wealthy through a progressive tax system, at a cursory
glance, may appear to be beneficial, however, I am arguing to show the negative effects not only for
the wealthy but the United States economy as a whole. Some may believe that all of the government
funded

The Inequality Of Income Distribution
In an economic sense, income distribution refers to how wages and salaries are split among a society
of people. The top earners in a society are naturally considered to be the richest, whereas the lowest
earners are the poorest. In any society, such differentiation in earnings commonly creates class
systems based on yearly income. This structure is often measured by labeling people as lower class,
middle class, or upper class depending on yearly earnings even though there can be a large
difference in the top and bottom incomes of a class. Concerns about the inequality of the distribution
of income in any society are often brought about when individuals believe that one income class is
earning too large or too little of a percentage of the total income. In the United States however,
certain policies and programs are in place to combat criticism against the fairness of income
distribution. In addition to these policies and programs, the United States was founded on the belief
that any individual, regardless of social class or birth status, should be as successful or unsuccessful
as they wish depending on their ability to capitalize on opportunities presented to them throughout
their life. Commonly known as "The American Dream," this notion towards freely being able to
create one's own wealth and worth can be seen throughout the history of the United States and is a
major factor that guided America to become one of the world's economic super powers. After
recognizing a historic

Federal Income Tax, State Tax And Property Tax
The concept behind federal income tax, state tax, and property tax is........
The ratification of the sixteenth amendment to the constitution established the federal income tax.
The federal income tax is a tax the United States government collects on the wages and income an
individual may earn in a year. Each year federal income taxes are collected from millions of
Americans based on a progressive taxing formula. The progressive structure of the formula is
designed to ensure that each individual no matter their income, pays what is considered a fair
taxation rate. If an individual earns more, more taxes are levied against the earned wages and
income.
States tax their citizens in a similar fashion as the federal government. However, the income tax
rates or percentages at the state level are much lower. States also employ a tax that the federal
government does not have. This tax is called a sales tax. The tax on goods and services such as
clothing, automobiles and dining in at a restaurant is regressive. No matter what the income of an
individual, the tax remains the same, unlike a progressive system. There are many states that do not
have an income tax. These states get a large proportion of their revenue from sales taxes. States such
as California, New York, and Massachusetts, have some of the highest state income tax and sales
taxes in the United States. ... Show more content on Helpwriting.net ...
A county in Texas cannot tax a property in Nevada. The federal government does not levy property
taxes, some states do, and all local counties and municipalities do. Homes, land, and buildings are
considered property. Not every individual owns property so not everyone pays property

No Taxation without Representation Essay
Taxation is an extremely controversial topic in the United States because in order to continue to
enjoy the American comforts of healthcare, social security, national and neighborhood defense, and
regulated clean water and air, to name a few, we continue to increase the demands of our
government without wanting to pay for the supply of services. Remember, money is a currency and
can be used to consume, invest, save, pay loans (including credit cards), or pay taxes. If asking
various families what it means for American's to have life, liberty, and the pursuit of happiness as
described in the Declaration of Independence, the responses will vary drastically. Background:
United States Economy and Reasons for Taxation The U.S. economy is ... Show more content on
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These rights are instilled in every American citizen and people migrate from all over the world to
have the same opportunities that we take for granted in this great country. Taxes primary function is
to pay for the government to provide our country with services such as national security,
international relations, environment conservation, space exploration, agriculture stabilization,
housing assistance, transportation infrastructure, education, unemployment assistance, health
assistance, social security, veteran benefits, and administration of justice to name a few. As a society,
there are a few questions that continually arise but are never decided upon. First, which services are
considered merit goods, commodities that the public sector provides free or at a discounted price in
order to encourage consumption (Britannica)? Second, how much of a merit good should be paid for
by the government? Third, should the merit good be publicly or privately provided? Fourth, if there
is a good which is not considered a merit good but has a large positive externality, should it be
government subsidized? Lastly, should the wealthy contribute more taxes than the poor? I'm sure we
can all agree that there are some goods that need to be publicly provided by the government in order
to ensure that everyone has a minimum amount of benefit from the good, one example being
national security. We the people of the United

Chapter 2

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Chapter 2