Tax planning and tax avoidance is supportable because it is legal and rational for the ordinary taxpayers to do so, and it is beneficial to both big corporations and individual taxpayers.
From the perspectives of the concept and nature of tax avoidance, it is a type of tax regime used to help citizens reduce tax payable for their own benefits by using different methods within the law with a full disclosure of fundamental information around tax issues. It suggests that tax avoidance does not against law. Therefore, for citizens who want to minimise the tax that they have to pay and maximise their own savings, avoiding tax within the rules set out in law is acceptable and is a rational behaviour.
Using tax avoidance is a simple way for big companies to increase their profits. More importantly, more investors of the company can be attracted by the good looking financial performance as a result of using tax avoidance scheme. There are schemes where shareholders invest in certain funds used for improving British film productions and alternative energy projects and they can be beneficial to receive more tax relief. In this way, tax avoidance actually increases the investment opportunities for the corporations, which also helps the development of the business.
Tax avoidance is also beneficial for individual taxpayers. Some tax avoidance schemes actually encourage taxpayers to invest money for their own future benefits. For instance, they can put their saved money from the schemes into their pension scheme or enterprise investment schemes which can help with the business growth.
However, there are amounts of arguments against tax avoidance, stating that it is not right, harms the function of the government, and most of the time it is too...
... middle of paper ...
...he conflicts will be increased gradually, which probably will make it impossible to solve problems between the countries, not even mention to reduce tax avoidance.
In conclusion, the statement can be for and against for different reasons. When it comes to the possibility of all countries agreeing on such a framework, the standpoint of this essay is they may agree. If only one framework could solve all the problems, then no one would have excuses to refuse such an offer. Using one international framework will reduce lots of barriers of tax issues among the countries. In this case, it saves time, finance and human resources to deal with the problems; increases the efficiency of the working procedures of taxation both nationally and internationally; and advances the economic development by increasing trading and investment activities with countries all over the world.
...lict. Neighboring countries will want to maximize their own revenues and in order to do so, they will set their own prices for goods and services.
The current system, although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has been road-tested.... ... middle of paper ... ...
Many debates have been waged over the decades on what will be taxed, on who shall be taxed and how taxes are collected. Since the 16th Amendment was ratified in 1913, the debate has intensified, centering on how high to make the income tax rate. Most Americans were not concerned since the Amendment was sold to them as something that would only affect corporations and the rich. With ever increasing fervor these corporations created lobbyists to convince Congress to exempt them from some or all of the income tax. The big breakthrough in this was taxing the worker directly with payroll taxes during World War II. This method of collecting income tax was sold to Americans as temporary, but Congress has extended it indefinitely and the public has become used to it. The next few decades saw the debate revolve around creating tax breaks for individuals in an attempt to modify behavior or spending. This has resulted in over 67,000 pages of tax code and an entire industry devoted to tax compliance and evasion, with the unintended behavioral change of corporations and the rich parking their money outside of the United States in small island nations to avoid taxation. These offshore accounts are estimated to hold $10 trillion dollars, a number approximate to the national debt. The FairTax Act should be enacted because it eliminates all federal income taxes for individuals and corporations, eliminates all federal payroll withholding taxes, abolishes estate and capital gains taxes and repeals the 16th Amendment; thus eliminating the need for offshore accounts.
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.
... accounts to avoid taxes. The Swiss Federal Council. (2013, May 29). Swiss government peels back bank secrecy rules. CNNMoney. Retrieved March 30, 2014, from http://money.cnn.com/2013/05/29/news/economy/swiss-bank-secrecy
Embezzlement of money from a company can understate cash and show a false picture to the creditors and investors. This can lead them to make decisions on misrepresented information. Another example of misappropriation of assets was of a hedge-fund manager, Philip A. Falcone who borrowed $113.2 million from investors from a hedge fund company (Harbinger Capital) and he used that money fraudulently to pay off his personal taxes. Instead of using the investor’s money for the intended purpose, which was to build a wireless phone network, he deceived them by using the money without their knowledge to pay off his taxes. The company had to file for bankruptcy as it had $23 billion in losses and withdrawals and it could not pay back The company concealed huge debts off its balance sheet, which resulted in overstating earnings.
A tax haven is a country that offers foreign corporations and individuals relatively low corporate and income tax rates, with a politically and economically stable environment. Some tax havens are Switzerland, Hong Kong, Bermuda, Ireland, and the Cayman Islands. The United States government has been fighting against the movement of corporations because it is not collecting taxes from these corporations that it could have used to reduce government debt. However, corporations have found loopholes that exempt them from United States tax laws. Companies are moving their headquarters across seas for tax benefits to keep their shareholders content. The United States government needs to reduce its corporate tax system so the country does not lose more companies, jobs, and money to foreign entities.
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.
During this article she brings in some good examples such as the company Theranos and Donald Trump, although many people may not know what the company Theranos many know Donald Trump, making this article easy for people not in the business world relate to while still keeping that target audience of those in the business and finance industry. She uses a quote from trump saying tax evasion is a smart move, however it is anything but. “The Internal Revenue Service estimated that in 2001, the tax gap was $345 billion. The tax gap is the difference between the amount of tax legally owed and the amount actually collected by the government. The tax gap in 2006 was estimated to be $450 billion. The tax gap two years later in 2008 was estimated to be in the range of $450–$500 billion and unreported income was estimated to be approximately $2 trillion. Therefore, 18-19 percent of total reportable income was not properly reported to the IRS.”Taxes pay for our roads to get fixed and many other things, this quote tells us just how much money for our roads, government workers, and many others we are missing out
The purpose of this paper is to illustrate the layout of taxation. I will differentiate the types of taxes and the roles that they serve currently. Subsequently, I will explain what equity, efficiency, effectiveness and transparency (EEET) are and show how they apply to taxation as a whole. Lastly, I will conclude how the EEET applies to the four tax types.
Taxation is a compulsory levy imposed on the income, value of goods and services of individuals, partners and companies by the government. It is can be said to be an approach of imposing tax on the citizen. This imposition of tax, is expected to yield income which should be utilized in the provision of both basic and substantial infrastructural amenities, both social and security, as well as creates conditions for the economic well-being of the society at large.
Interdependence: The possibility that unhindered commerce trade prompts interconnections that make clash too much over the top.
The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real connection. Throughout the course of this assignment I will begin by explaining the concept of legal personality and describe the veil of incorporation. I will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions such as s.24 CA 1985 and incorporate the varying views of judges as to when the veil can be lifted.
To conclude, the necessity of “received by” as explained by the judicial system can be said to equal to something that was accepted by the individual paying the taxes for his or her own advantage. The question comes to the mind whether the understanding by the judicial system of “received by” for reasons of illegal earnings can be widespread to mean “for consideration” for the Value Added Tax meanings. Therefore a contrast may be considered to be drawn between the taxed plan of the “Income Tax Act” and the “Value Added Tax Act”
We therefore need to pool as far as is feasible our markets and our financial human and natural resources. We need a single unified and truly common market for goods and services, capital, and trained manpower. In addition we need to coordinate not only the development of our productive sectors but also our economic policies. And we need both a common external tariff and a common set of external trade, economic and other policies.