This chapter includes contents: Define the comprehensive income tax base, discuss the international principles of taxing income, discuss the reasons why the personal income tax base differs from the comprehensive income tax base, explain what a progressive personal income tax is and how progressiveness is achieved,...
Trang 7TOTAL (COMPREHENSIVE) INCOME
minus Exclusions (eg imputed rent & unrealised capital gains)
GROSS (CASH) INCOME
minus Exemptions (eg tax-free portion of interest)
NET INCOME
minus Deductions (eg contributions to medical scheme)
TAXABLE INCOME
Tax according to tables
GROSS TAX LIABILITY
minus Rebates (primary rebate and rebate for age 65 and over)
NET TAX LIABILITY
Trang 14• Bracket creep
• Real income
Trang 15Reasons for taxing companies
Trang 16The company tax base
Trang 18• Real & financial cash-flow tax base equals [(sales +
borrowing + interest received) – (real purchases + interest payments + debt repayment)]
Trang 20• Pressure group action
• Uneven tax burden
• Less successful in attracting foreign investment
• Windfall gains would have taken place anyway
• Obstacles to investment better address directly.
Trang 22• Lock in rather than realise investments.
Trang 23• Flat rate income tax
• Duel income tax
– Personal capital income separately taxed from labour income
– Labour income
– Company income
– Nordic countries.
Trang 24• Lack of responsiveness to international competition
• Vertical inequity.