UNIT 8: TAXATION Flashcards
How many main ideas are there in unit 8?
In my opinion, there are 5 main ideas:
1. Firstly, it talks about the Functions of taxation.
2. Secondly, it mentions the advantages and disadvantages of different tax systems.
3. Thirdly, it talks about Tax evasion
4. Next, it talks about Avoiding tax on salaries
5. Finally, it talks about Avoiding tax on profits
What are the FUNCTIONS of taxation?
- PRIMARY FUNCTION: raise revenue to finance government expenditure.
- OTHER FUNCTIONS:
- dissuade people from consuming some kinds of products.
- Encourage capital investment.
What are the ADVANTAGES of tax?
progressive tax (income taxes) is designed to redistribute income.
How many times business profits are generally taxed?
Business profits are generally taxed TWICE:
- [companies pay tax on their profits (income tax)
- the shareholders pay income tax on dividends]
-> có thể trả lời hoặc ko.
What is the marginal rate of taxation?
A marginal tax rate is the amount of tax paid on an additional dollar of income
what is the problem with progressive tax?
The problem is the MARGINAL RATE is usually high, which is a disincentive to both working and investing.
what are the disadvantages of tax?
- business profits are usually taxed twice
- the progressive tax is usually high, which is a disincentive to both working and investing.
What is tax evasion?
Tax evasion means making false declarations to the tax authorities.
who usually involve in tax evasion?
(=How do people evade tax?)
- self-employed people undeclare their income.
- lots of people undeclare their part-time evening jobs.
Can you give an example of [ways to avoid tax on salaries are known as] loopholes in tax laws?
Employers give highly-paid employees lots of perks instead of taxable money to avoid taxes such as company cars, free health insurance, and so on
Can you give an example of [ways to avoid tax on salaries are known as] TAX SHELTERS?
life insurance policies, pension plans, and other investments by which individuals can POSTPONE THE PAYMENT OF TAX.
What is TAX-DEDUCTIBLE?
Tax-deductible is the amount that can be subtracted from the income on which tax is calculated.
Can you give an example of [ways to avoid tax on salaries are known as] tax-deductible?
For example, Donations to charities that can be subtracted from the income on which tax is calculated.
Can you give an example of [ways to avoid tax on profit are known as] making a tax loss?
(=what kind of ways to avoid tax on profits are known as MAKING A TAX LOSS?)
Companies bring forward capital expenditure so that at the end of the year all profits have been used up
What are tax havens?
tax havens are countries where taxes are low.
Where do multinational companies often set up their head offices in?
Multinational companies often set up head offices in countries where taxes are low (tax havens)
What do criminal organizations tend to do in order to disguise the origin of their money?
(=What is money laundering?)
(=How does money laundering work?)
criminal organizations pass money through a series of companies in very complicated transactions to disguise the origin of their money.
summarize unit 8 taxation
I will summarize Unit 8. Unit 8 is about taxation. In my opinion, there are 5 main ideas:
1. Firstly, it talks about the FUNCTIONS of taxation:
- PRIMARY FUNCTION: raise revenue to finance gov expenditure
- OTHER FUNCTIONS:
- dissuade people from consuming some kinds of products.
- Encourage capital investment.
_*2. Secondly,_ it talks about the ADVANTAGES AND DISADVANTAGES of different tax systems:
- ADVANTAGES: progressive tax (income taxes) is designed to redistribute income.
- DISADVANTAGES:
- business profits are usually taxed twice
- the progressive tax is usually high, which is a disincentive to both working and investing
3. Thirdly, it mentions TAX EVASION:
- self-employed people undeclare their income.
- lots of people undeclare their part-time evening jobs.
4. Next, it talks about AVOIDING TAX ON SALARIES:
- Employers give highly-paid employees lots of PERKS instead of taxable money: company car, free health insurance, and so on. -> loopholes in tax laws
- life insurance policies, pension plans, and other investments-> tax shelters.
- donations to charities-> Tax-deductible.
5. Finally, it talks about AVOIDING TAX ON PROFITS:
- Companies bring forward capital expenditure so that at the end of the year all profits have been used up -> making a tax loss
- Multinational companies often set up head offices in countries where taxes are low -> Tax haven
- Criminal organizations pass money through a series of companies in very complicated transactions to disguise its origin from the inspectors and the police-> Laundering money.
(Nguồn tham khảo: tài liệu do Giảng viên Phạm Thị Thu cung cấp)
How many kinds of taxes are there?
There are 2 kinds of taxes: direct tax and indirect tax.
What is direct tax?
direct tax is a tax levied on a taxable person such as income tax.
What is indirect tax?
Indirect tax is a tax levied on goods and services such as payroll tax, excise tax, and customs duties,…
How many main kinds of tax rates are there?
There are 2 kinds of tax rates: progressive income tax and regressive income tax.
- A progressive tax is a tax levied at a higher rate on higher incomes.
- A regressive tax is a tax levied at higher rates on lower sales, and vice versa.
What is tax?
Tax is amount of money that you must pay for government according to your income, your property, goods and services that you bought before.
What is Customs duty?
Customs duty is a tax imposed on imports and exports of goods.
What is an Income tax?
Income tax is a tax levied on income of corporation or individual.
What is Excise duty?
Excise duty is a tax levied on specific goods and services such as wine, cigarette, and so on.
What is Payroll tax?
Payroll tax is a tax imposed on salaries or wages of employees.
What is Corporate income tax?
Corporate income tax is the tax imposed on corporate income.
What are Tax shelters?
Tax shelters are the way people use them to avoid tax.
What is the difference between tax evasion and avoiding tax?
What is the value-added tax? (VAT)
Value-added tax is a tax collected at each stage of production, excluding the already-taxed costs from previous stages.
What is capital transfer tax?
Capital transfer tax is the tax imposed on gifts and inheritances over a certain value.
What is capital gain tax?
Capital gain tax is a tax imposed on profits made by SELLING ASSETS.
What is individual income tax?
Individual income tax is the tax imposed on personal income.
What is progressive tax?
A progressive tax is a tax levied at a higher rate on higher incomes.
Why do people evade tax?
Because they feel entitled to keep their money since they earned it.
And they think the reward outweighs the risk of getting caught and punished.
