Introduction
Double taxation arises when an individual or business acquiring income in a foreign country is required to pay taxes on that income in both the foreign country as well as the country of origin. For example, an American company operating in a developing country, in the absence of a tax treaty between the two countries may have to pay a withholding tax to the government of the developing country, as well as corporation tax to the United States government (Howard, 2001, p. 259).
The purpose of this paper is to examine the merit of three basic systems, which is exemption system, credit system and deduction system. These systems are dealings with the essence of tax relief from international double taxation.
A discussion of various countries on their practices on tax relief system and the rationale for using the system will be presented, followed by an analysis of the most advantages system to taxpayers. Finally identifies the system that most preferred by countries and the justification for adopted such system.
Systems adopted by countries to ameliorate the burden of International Double Taxation
Double taxation is always considered to be one of the most important issues in international taxation. With the more and more business moving towards globalization and cross-border investment, double taxation is often cited as a major obstacle to liberate economic progress.
There are basically three types of systems for double taxation relief, the exemption system, credit system & reduction system. The globalization drive has led to an increased knowledge and understanding of the various taxation systems in countries around the world.
The Exemption System
Under exemption systems, a taxpayer of a country (the res...
... middle of paper ...
... Systems and Tax Reforms in Europe,
Routledge, New York
Edwards, Chris 2003, Tax Competition Spurs Globalization'
USA Today, vol. 131, Issue 2694, March, p. 26
Gillis, Malcolm 1989, Tax Reform in Developing Countries
Duke University Press, Durham
Howard, Michael 2001, Public Sector Economics for Developing Countries,
University Press of the West Indies, Barbados
KPMG's Corporate Tax Rate Survey January 2003
Li, Jinyan 1991, Taxation in the People's Republic of China,
Praeger, New York
Salinas, Javier G 2003, The OECD Tax Competition Initiative: A Critique of Its
Merits in the Global Marketplace'
Houston Journal of International Law, vol. 25, Issue. 3, p. 531
Stephens, C Neil 1998,
A Progressive Analysis of the Efficiencies of Capital Import Neutrality',
Law and Policy in International Business, vol. 30. Issue. 1. p. 159.
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 ... ...
Double and Triple Taxation Must be Eliminated. President George Bush states that "it's unfair to tax money twice." This statement is actually an example of normative economics and only describes an opinion. It cannot be proven because the term "unfair" is relative to different people; however, not many people would dare to disagree. Especially if the double tax was not aimed only at the large corporations or the richest 10% of the nation, but at every hardworking American who brings home a paycheck.
14 Feb. 2014. . “Progressive Taxation System: A Brief Study on Its Pros and Cons”. Progressive Taxation System: A Brief Study on Its Pros and Cons. N.p., n.d. Web.
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.
Excise taxes consisted of three excises. One of the excise is luxury excise. Luxury excise taxes are levied on items on unique or predominately for prestige people. In the past, taxes were implemented on expensive items like yachts, expensive automobiles, and expensive automobiles. Luxury excise is paid at federal level. One of the issue that people have hard time to determine luxury. For example, the value of the product determines the luxury. Another issue is that this can create distortions between taxed and untaxed. Sumptuary excise is another excise tax. Sale taxes are regulatory in nature. Taxes on alcohol and tobacco were set high for people that consume it. In 1990 ,the government raise taxes on these products to assist with other programs. Sumptuary excise has two reasons why it will be regressive which is that alcohol and tobacco usage is gear towards low income instead of high income people and taxes are unit instead of ad valorem and effective tax rates are higher for lower priced brands. Benefit based excises consisted of the basis of the benefits concept. The concept is that the tax should levied on individuals who cause particular services to be provided and to proceed from taxes should go to finance a service For example , Motor vehicle fuel taxes. Taxes that are collected from this fuel taxes is use for
In this article the author has discuss the different issues about the economical aspect that are related to the individual and government level. Author has focus on the taxing policies and has criticized the unfairness in those policies. Along with this discussion author has also discussed the points which could be used as the solution for unfairness in taxing policies. In this essay I will presents rhetorical analysis o this essay with different point of view. I will discuss the use of ethos, logos, pathos and also discuss
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.
Government expenditure and taxation, as well as debts, are of great national importance as far as the economic growth is concerned. The collection of taxes has so much to do with the economic growth of the country (Konczal & Mason, 2017). With revenues from the taxes, the government provides a whole lot of services that require proper funding to be a success. The United States government has expressed the desire to reduce the taxes to increase the disposable income to its working class and steer economic growth. The government has considered tax cut as a strategic move to achieve economic justice.
A simple tax is one that can be easily understood, records easily kept, and payments easily made. Our current system does not hold these traits. The tax code is complicated, records being lost is not far-fetched, and payments take months to be analyzed. An efficient tax is one that the government can collect taxes without excessive time or money. As stated before, it takes many months to process tax returns. According to IRS.gov, their budget in 2016 was almost two billion dollars, which could be greatly reduced if we moved to a flat tax system. A tax should be certain, which means it should be clear to how much tax is owed. In our current system two people who have the same exact tax information and deductions can owe the government two entirely different amounts. In the flat tax system, it would be unquestionable what a person owed in taxes. A tax should be equitable, meaning there is not too much or too little tax burden felt by anyone. In our current system, there is a great deal of burden on the upper class. What this does is lowers the incentive for making more money. Critics of the flat tax will say that the upper class should pay more in taxes because it is ‘unfair' for one person to make so much money. Although if you put yourself into those shoes, working hard your entire life, would you want the government taking a great deal of your hard-earned money and giving back to people who show no incentive to go out and
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.
Optimal Taxes Should Depend On Personal Characteristics As Well As Income: Reliance on individual income as the only source of determining ability to pay tax is discouraged. Mirrlees (1971) suggests that other characteristics such as I.Q, number of degrees, age and colour should be used in determining the ability of a taxpayer. Other barometers referred to as “Tagging” was put forward by Akerlof (1978) to supplement the income oriented tax system. This provided more information on individuals, which the policymakers can capitalize on while determining tax liability.
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.
The Court has established three principles which determine whether a payment is an income, these are. First, whether a payment ought to be treated as income must be fixed by the ordinary concepts and usages of humanity. Second, whether the payment received is income will depend on a close examination of the specific facts and by looking at the character of the payment in the hands of the recipient. Thirdly the courts have created an objective test, looking at the income
...ruggle or in some cases continue to struggle if this tax was a continuous one. This tax is aimed at helping the disadvantaged and creating equality within our country and with the help from this tax our country would be on its way to moving forward to that step. The Khulumani Support Group welcomed this “wealth tax” in a statement that set out fair steps that should be taken by government officials to put this wealth tax in place. Their steps are not only fair but are also logical, wanting at least R2 billion for 5 years thus when divided up providing R2000 per month to the amount of victims that are estimated at around 120, 000.
Tax expenditures are popularly known as tax loopholes or tax breaks. It departures from the normal tax structure and ...