Tax Plaza
The Tax system explained!
Proportional tax
A proportional tax is a tax imposed so that the effective tax
rate is fixed as the amount to which the rate is applied
increases. The term "proportional tax" describes a distribution
effect, which can be applied to any type of tax system (income
or consumption) that meets the definition. The term proportional
refers to the way the rate remains consistent and does not
progress from "low to high" or "high to low" as income or
consumption changes. A progressive tax is a tax imposed so that
the tax rate increases as the amount to which the rate is
applied increases. The opposite of a progressive tax is a
regressive tax, where the tax rate decreases as the amount to
which the rate is applied increases. Proportional taxes maintain
equal tax incidence regardless of income level and do not shift
the incidence disproportionately to those with higher or lower
incomes. Proportional taxes are uncommon in advanced economies,
whose nationwide taxes typically include a graduated tax on
household incomes and corporate profits, such that the marginal
tax rate rises as the income or profit of the taxed entity
rises. Flat taxes, implemented as well as proposed, usually
exempt from taxation household income below a statutorily
determined level that is a function of the type and size of the
household. As a result, such a flat marginal rate is consistent
with a progressive average tax rate.
Proportional rates
Proportional taxes on consumption are considered by some to be regressive; that is, low income people tend to spend a greater percentage of their income in taxable sales (using a cross section time-frame) than higher income people. However, this calculation is derived when the tax paid is divided not by the tax base (the amount spent) but by income, which is argued to create an arbitrary relationship. The tax rate itself is proportional with higher income people paying more tax but at the same rate as they consume more. If a consumption tax is to be related to income, then the unspent income can be treated as tax-deferred (spending savings at a later point in time), at which time it is taxed creating a proportional rate using an income base. However, consumption taxes like a sales tax can often exclude items or provide rebates in an effort to create progressive effects. In many locations, "necessary" items such as non-prepared food, clothing, or prescription drugs are exempt from sales tax to alleviate the burden on the poor.
Taxation in the News
Big medical bills may add up to qualified tax breaks
(Detroit news photo illustration / Photos from isto) Taxpayers swamped by big medical bills in 2011 can get some relief when they file income tax forms this spring thanks to an overlooked deduction that is hard to reach in a typical year. The IRS lets
Feds targeting tax return fraud
Maybe you had a lapse of memory but most likely you have become the latest victim of tax fraud. The Internal Revenue Service and the Justice Department have been cracking down on suspected identity theft perpetrators to curb the growing issue of refund
China bars airlines from EU tax plan
Chinese airlines had previously said they would not pay the EU carbon tax, but the formal prohibition by the State Council, or cabinet, pits Beijing in direct opposition to Brussels. The announcement, published on Monday by Xinhua, the official news
Tax tips for February
Folks who have been victims of tax identity theft should have gotten a special Identity Protection PIN (personal identification number) by now, according to David Mellem, an enrolled agent in Green Bay, Wis. Julianne Breitbeil, an IRS spokeswoman,
EU Transactions Tax Will Hit Hardest in London, ITEM Club Says
6 (Bloomberg) -- A proposed European tax on financial transactions may cost British-based companies as much as 22 billion euros ($29 billion) a year and cause 4500 job losses whether the UK agrees to it or not, according to Ernst & Young LLP's ITEM
A Salve for a Taxing Moment: The Vodafone Ins...
The two judges did not think that Vodafone's purchase of Hutch's business was done in a manner to avoid taxes. The two judges also said that the shares that gave Vodafone control over Hutch's telecom business in India were registered outside the
Paper tax forms getting harder to find
But increased usage of online tax-preparation software has changed the way people file their taxes, IRS spokeswoman Peggy Riley said. 'When more and more people are using electronic filing, you don't need to have that paper tax document anymore,' Riley
Taxes
What is tax?
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as unpaid labourInteresting articles
Ten Top Tax-saving Ideas at Year-endDiscover How Government Protected Tax Certificate Profits Can Make Your Family Secure for a Lifetime!
Keeping Your Own Money NOT Handing It Over To The Taxman.
Implications of Income Tax Charge on Estate Planning
Tax Cuts For Homeowners Hurt Miami Schools
Discover How Government Protected Tax Certificate Profits Can Make Your Family Secure for a Lifetime!
Be All - End All Tax Attorney Blog!!!
Three Reasons Why Network Marketing Will Increase Your Taxes