tax break

Examples of tax break in the following topics:

• Tax Accounting

  • Tax accounting couples legal obligations with financial accounting to ensure adherence to current tax laws.
  • On the strategic side of this, tax accountants can consider any tax implications as it pertains to certain strategic decisions or tactics.
  • For example, some manufacturers can receive tax breaks for environmentally friendly operations, often high enough tax breaks to offset the cost of implementing them.
  • More tangibly, tax accounts will focus on the preparation, analysis, and presentation of tax payments and tax returns at all times.
  • Non-profits have unique tax preparation requirements due to their no-tax status.

• Incentivizing Saving and Investment

  • The most common way of doing so is by adjusting tax rates.
  • For example, a government can offer a tax break to companies that are investing in a desirable area (e.g. medicine).
  • It can also encourage savings through tax breaks.
  • Roth IRAs are an instrument for saving for retirement that the US has made tax exempt (under certain conditions).
  • In the first example, the government uses tax reductions to encourage investment for companies.

• Tax Rate

  • The tax rate is the amount of tax expressed as a percentage.
  • In a tax system, the tax rate describes the ratio at which a business or person is taxed .
  • An average tax rate is the ratio of the amount of taxes paid to the tax base (taxable income or spending).
  • To calculate the average tax rate on an income tax, divide the total tax liability by the taxable income.
  • It also incorporates tax breaks or exemptions.

• The Whiskey Rebellion

  • The Whiskey Rebellion, or Whiskey Insurrection, was a tax protest in the United States beginning in 1791, during the presidency of George Washington that directly challenged the federal government's right to levy taxes.
  • Although such taxes were politically unpopular, Hamilton believed the whiskey excise was a luxury tax that would be the least objectionable tax the government could levy, and it would ultimately benefit the body politic by paying off foreign debt and stabilizing the United States economy.
  • Small farmers also protested that Hamilton's excise effectively gave unfair tax breaks to large distillers, most of whom were based in the east.
  • Resistance to the whiskey excise tax came to a climax in 1794.
  • An 1880 illustration of a tarred and feathered tax collector being made to ride the rail.

• Gridlock in Government

  • Bush was further constrained by the emphatic pledge he had made at the 1988 Republican Convention—“read my lips: no new taxes”—and found himself in the difficult position of trying to balance the budget and reduce the deficit without breaking his promise.
  • In the wake of the struggle with Congress, Bush was forced by the Democratic majority to raise tax revenues; as a result, many Republicans felt betrayed because of Bush's "no new taxes" pledge.
  • Angered Republican congressmen defeated Bush's proposal which would enact spending cuts and tax increases that would reduce the deficit by $500 billion over five years.
  • The Act increased the marginal tax rate and phased out exemptions for high-income taxpayers.
  • Despite demands for a reduction in the capital gains tax, Bush relented on this issue as well.

• Special Reporting

  • They are reported separately, and net of taxes, so that stakeholders can better predict future cash flows.
  • Other special reporting issues include Earnings per Share, Retained Earnings and Intraperiod Tax Allocation.
  • The statement breaks down changes in the owners' interest in the organization, and also in the application of retained profit or surplus from one accounting period to the next.
  • Intraperiod Tax Allocation: With intraperiod tax allocation, the specific item (or items) that generated the income tax expense are shown on the income statement with the applicable tax amount applied.
  • Income tax is allocated to income from continuing operations before tax, discontinued operations and extraordinary items.

• The benefit of benefits

  • Workers' Compensation is paid to employees if they are injured while performing work necessary for their job function; this can include breaking a bone, getting into a car accident, or payments made to the family of someone killed on the job.
  • These are attractive to businesses as well as employees because they provide both with some tax advantages.
  • This is a benefit to employees because individuals will receive a portion of their income tax-free.
  • Employers also benefit from offering these types of programs because they also receive tax benefits and they retain happy employees by providing programs that meet their needs.
  • They are not usually required by the government but companies may receive tax benefits for some types of these non-monetary payments.

• Free Enterprise Economics and Reaganomics

  • Economic growth would also increase the total tax revenue—even at a lower tax rate.
  • On July 29, 1981, Congress passed the Economic Recovery Tax Act, which phased in a 25% overall reduction in taxes over a period of three years.
  • During Reagan's presidency, federal income tax rates were lowered significantly with the signing of the bipartisan Economic Recovery Tax Act of 1981, which lowered the top marginal tax bracket (for the wealthiest Americans) from 70% to 50% and the lowest bracket (for the poorest Americans) from 14% to 11%.
  • Despite the fact that TEFRA was the "largest peacetime tax increase in American history," Reagan is better known for his tax cuts and lower-taxes philosophy.
  • Reagan’s economic policymakers succeeded in breaking the cycle of stagflation that had been plaguing the nation, but at significant cost.

• Corporate and Payroll Taxes

  • Many countries impose a corporate tax, also called corporation tax or company tax, on the income or capital of some types of legal entities.
  • The taxes may also be referred to as income tax or capital tax.
  • The effective tax rate is the average corporate tax rate on the company's income and this takes into consideration tax benefits included in a current tax year.
  • Corporations are also subject to a variety of other taxes including: property tax, payroll tax, excise tax, customs tax and value-added tax along with other common taxes, generally in the same manner as other taxpayers.
  • Deductions from an employee's wages are taxes that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG).

• Comparing Marginal and Average Tax Rates

  • An average tax rate is the ratio of the total amount of taxes paid, T, to the total tax base, P, (taxable income or spending), expressed as a percentage.
  • Broadly, the marginal tax rate equals the change in taxes, divided by the change in tax base, expressed as a percentage.
  • A progressive tax is a tax in which the tax rate increases as the taxable base amount increases .
  • A regressive tax is a tax imposed in such a manner that the average tax rate decreases as the amount subject to taxation increases .
  • A proportional tax is a tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.