What is TAX?
Tax is a fee charged by the Government of a country on activity, income or a product. There are two types of taxes one is direct tax if tax is directly applied to a corporate income or a person. Second type is indirect tax which is charged to the goods or services. The objective of this tax is to finance a government expenditure on the welfare of the country like construction of roads, dams, road lights etc.
What is Rationalization?
Rationalization is a process in which restructure a process to increase the efficiency of the system. In tax rationalization means that restructuring of the tax policy through which the efficiency of the policy can be increased. This restructuring can add or remove some steps in the policy through
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It is imposed on a person not on a family as unit. The rates of tax increase with the progressive basis. This tax is imposed by federal level.
Capital Gain Tax
Capital gain tax is applied on disposal of a asset and the extra amount received through the sale. There are some exemptions too for example the family home. CGT is applied on the net gain of asset sale.
Corporate Taxes
Corporate taxes are paid by the companies on their profits and the flat rate 30 % tax is applied on the profit. Tax is calculated before the distribution of dividends. A tax credit is given to shareholders if they have paid the tax at corporate level.
Goods and services taxes
GST tax is applied on goods and services as a value added tax by the federal government at the rate of 10%. The GST was introduced in the year of 2000. There are some exemption on the goods for example foodstuffs, medical and education items.
Property taxes
The local government of the Australia main source of funding is property taxes. State can apply extra tax on high value properties in the form of stamp duties on transfers. The other type of tax applied on domestic homes is fire services.
Excise
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In Australia mostly tax payers have now equity investment other than the goods and service as in previous years. Due to globalization and e-commerce the more complicated rules of tax developed to deal with the new things or situations. There are many reforms in the Australian tax system in the history to improve its tax system. To achieve the objectives of a policy a more complex outcomes. Sometimes tax policy consideration extend beyond limits for example the objective of the tax policy is to provide the social security which required tax provisions. More complex financial working arrangement in Australia developed this sophisticated system of tax. Main consideration of the policy in the previous two decades was to remove poverty from the Australia. The complexity in the transfer system is the payment structure, who is eligible for the benefit and which income will be considered as taxable or non taxable due to complex rules and regulations. Small changes to the policy may bring a system which is inherently more complex and not consistent. New transfer system doesn't have to be complex than the previous. A small change by the government can increase the complexity of the system in the result of this small change. Incremental change in the system is more accepted because it does not disrupt the other system. There is trade off
Taxation is a system that the government uses to gain money, they gain this money to support the government and provide public services. The government may secure their profits without taxation from natural resources, products, or services. (Taxation 1)
Taxes are the dollars that we pay to government to supply the services that are not or can not be provided through the free enterprise system. Taxes have been around since the beginning of organized societies. They come in various forms. Most common are income taxes both federal and local government. These taxes are assessed on the amount of income a person earns. Other taxes come in the form of user taxes; these taxes are imposed on the people that are using the goods being taxed, such as gas tax, alcohol tax, sales tax, and luxury taxes. Property taxes make up the major revenues for local and city governments. Furthering the burden of taxation are taxes that are attached to such bills as utility bills and rental expenses.
The United States tax system is in complete disarray. Republicans and Democrats agree that the current tax code is complex, unfair, and costly. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms (Armey 1). The main reason the tax system is so complex is because of the special preferences such as deductions and tax credits. Complexity in the current tax system forces Americans to spend 5.4 billion hours complying with the tax code, which is more time than it takes to manufacture every car, truck and van produced in the United States (Armey 1). Time is not the only thing that is lost with the current tax system; Americans also lose great deal of money complying with the tax code. Resources that are currently wasted on record keeping, filing forms, learning the tax code, litigation, and tax avoidance. The cost of complying with the current tax code totals about $200 billion annually, or $700 for every man, woman, and child in America (Armey 1). The overwhelming consensus that the current tax system is inadequate has ignited the search for tax reform. There are numerous proposals for tax reform; one particular proposal brought forth by various conservatives is the idea of national flat rate income tax. The idea is to replace the current income tax with a single rate that everyone pays.
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.
Taxes have been paid since almost the beginning of human civilization. Ancient Mesopotamia taxed its citizens in the form of livestock nearly 4500 years ago. Egypt, China, Rome, and Greece are a few other cultures that have had taxation. (Tax History, the Definition of Income Taxes, a Taxucation, n.d.) As old and as common as taxation is, the United States hasn’t always taxed its citizens. The American colonies decided to leave the British Empire and start their own nation in part due to the unfair taxation of American citizens by the British government. It makes sense that a national tax after the Revolutionary War with Britain wasn’t immediately implemented. Our tax system wasn’t introduced until the Civil War in 1861 and then made into an Amendment in 1913.
Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.
The general sale is the largest revenue for state government. The tax base consisted of any consumption tax is a product and class of goods which values are measured in terms of retail gross and receipts. Some of the goods and services in exclude or include. For example , in the state of Illinois does not exempt taxes on prescription but the other states do exempt taxes on prescription. Another example is 29 states out of 45 states exempt taxes on food. Some of the reasons why taxes are exempt on some items and products is assist low income families. The taxes rates in the some state are 2.9% and other states can be up 7% percent. In order for states to avoid levies , bracket system are used to set amount is collected regardless of particular
The government use of taxes plays a crucial role in today’s economy as well as personal finances, it has and will continue to leave its mark on the world we live in.
While the tax rate and tax base of GST though are relatively low and narrow. “The current tax system is not going to keep up with the expenditure forecast. States haven’t got the fund to provide the services that community expects.” Mr. Tom Seymour (PwC tax managing partner). “Personal tax rates are already high in Australia and corporate tax is at the top of OECD corporate tax rates.” As a result of the limitation in reforming income tax and corporate tax, to provide more satisfactory public services, boarding the GST base and/or setting a higher GST rate is
These taxes are taken from the people’s income, consumables, and wealth. Tax brackets are used to determine the percentage of income a person must pay out of their check to the government. The rates haven’t always been substantial. Pre-World War II Era, tax rates were as low as 1% and 4% (Roberts, 2014). Consumable items, mostly purchased at a grocery or wholesale store, are also taxed, commonly known as sales tax. Although these taxes vary from state to state, the total cost the individual pays is the amount for the items purchased plus a percentage toward the government. More simply put, if a person were to buy a single loaf of bread, that person would have to pay at least two taxes; once on income, and the other on sales tax. Taxes on wealth come in the form of property tax. Owning a car, a home, land, a boat, etc. all come with extra taxes. Basically, if you own something of worth, you must pay the government in order to keep it.
Federal tax laws are run by Internal Revenue Service (IRS) which is an agency under the U.S. Treasury Department. The federal government makes $2 trillion in revenue each year through taxes and borrowing. Money is borrowed by selling federal securities, which include bonds, notes, and certificates. Savings bonds are the most popular, for that investors are able to receive interest on the money they lend to the government. There are many different kinds of taxes administered by the government which tax individuals, companies, programs, luxuries, and international goods. Individual income tax makes up for over half of the government’s income each year, in which the government takes a portion of the citizen’s income based on how much money they earn. This type of tax is a progressive tax which means it’s based on the person’s ability to pay, being that wea...
The four types of taxes this paper will discuss are income tax, sales tax, property tax, and user fees. Income tax was not permanently established until the 16th Amendment was passed in 1913. Most federal taxes had been previously derived from excise taxes on tobacco and alcohol and other consumer goods. The US Constitution, when written and still continues to, legitimize taxation in the United States through Article I, Section 8, that Congress has the power to lay and collect taxes, duties et al, pay the debts or provide for the common defense and general welfare of the United States (Cornell Law LII). Investopedia defines income tax as ‘a tax government(s) impose on financial income generated by all entities within their jurisdictions (Investopedia, 2014). Businesses and individuals are required to file an income tax return every year to determine if they owe taxes or qualify for a refund. That is determined by measuring the total income one earns to a designated tax rate, calculating one’s taxable income, which are some or all items of income reduced by other adjustments or expenses in that tax year. There are different subcategories of income tax; there is a federal income tax that is set by the federal government, apart from a few states, there is a state income tax that is imposed on their respective residents, as well as the possibility of there being local income tax ...
Tax rate refers to the percentage of the tax base, which is settled in tax. It is the tax charged by the government on a taxpayer’s income.
Taxes have always been the traditional sources of government revenues. Recourse to taxation to finance the operational costs of government has been availed of by rulers of all times and climes from antiquity down to the present. It is what the government uses for community development.
The Goods and Services Tax, or GST for short, is defined as the multi-staged tax consumption on goods and services (GST, 2015). It is the tax that is only charged on the supply of goods and services made in the course of running a business locally by a registered, or taxable, person (Boey, 2015). Replacing a country’s current tax is one of the purpose of the implementation of GST in some countries. For instance, Malaysia’s SST (Sales and Services Tax) is abolished with the new implementation of GST. GST is an ample of consumption tax that covers the stages of economic activity. There are three stages of economy activity, namely the primary sectors, secondary sectors, and tertiary sectors (Borrington & Stimpson, 2014). In other words, all sectors are affected by GST’s implementation. For example, the woodcutter sells each tree for RM 50, the manufacturer buys one and pays the woodcutter RM 53 (RM 50 + 6% GST), and the woodcutter keeps the RM 50 and gives RM 3 to the tax collector.