Flat Tax evolution in Central Europe
Backgrounder:

Flat Tax is type of taxation structure where everybody is taxed uniformly at a single rate. Under such a system, in place of a multiple and intricate income tax slabs, the state stipulates a ceiling, exceeding which everyone pays a fixed rate on all their income. With a view to encourage tax payment instead of tax evasion, the ceiling limit is fixed low enough which provides an incentive for the citizens to pay tax. Under the Flat Tax system, there is a single taxation on its inception. In respect of corporate tax, the concept is also similar where there is a similar structure for everybody. Several countries have adopted Flat Tax is a phased manner starting with Estonia in 1991, Latvia in 1994, Lithuania in 1994, ussia in 2001, Serbia in 2003, Ukraine in 2003, Slovakia in 2003, Georgia in 2004 and very recently omania…...

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References

Collins, Anthony. Slash and Earn. Legal Week. 2005. Retrieved from   Accessed 25 August, 2005http://www.legalweek.com/ViewItem.asp?id=24219 

Evans, Anthony J. Flat Tax: Ideas and Interest. Open Republic: July / August / September

2005. Retrieved from   Accessed 27 August, 2005http://www.openrepublic.org/open_republic/20050619_publication_no1_vol1/articles_papers_formatted/20050619_flat_tax.htm 

Flat tax. 1 March, 2005. Retrieved from   136190-16& type=LinksDossier Accessed 25 August, 2005http://www.euractiv.com/Article?tcmuri=tcm:29 -

The flat tax is however somewhat higher in the income range from $30,000 to $90,000. For earnings of $100,000 and above the flat tax is lower since the current income tax has higher tax brackets which take effect in those categories.
The following chart illustrates the rate at which taxes are presently collected under the current method of taxation and the taxes that would be collected under the Flat Tax method of taxation. As noted in the chart, the amount of taxes collected would essentially remain the same although the differences noted in this work would apply to the three income brackets listed in the following graph.

Figure 1

Flat Tax Method vs. Present Tax Method

SUMMARY AND CONCLUSION

There does appear to be quite a push at present from some sectors for the institution of the Flat Tax method in order to avoid the complexities experienced in the current method of taxing income…...

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BIBLIOGRAPHY

Gale, William G. (1999) Flat Tax. The Brookings Institute 1 Oct 1999. Online available at:  http://www.urban.org/UploadedPDF/1000530.pdf 

Forbes, Steve (2005) Flat Tax Revolution: Using a Postcard to Abolish the IRS. Regenery Publishing 2005.

Paulus, Alari, and Peichl, Andreas (2008) Effects of Flat Tax Reforms in Western Europe on Income Distribution and Work Incentives. Institute for the Study of Labor (IZA) Discussion Paper No. 3721. Online available at:  http://ftp.iza.org/dp3721.pdf 

McGrath, Jane (2009) What's the Difference Between a Flat Tax and a Fair Tax? How Stuff Works, 2009. Online available at:  http://money.howstuffworks.com/personal-finance/personal-income-taxes/flat-tax-fair-tax1.htm

With expensing, the first tax is abolished. Saving is, in effect, deducted in computing the tax."
The following list summarizes the key aspects of the flat tax (Rabushka, 1997):

1. "The flat tax, in effect, removes the tax code from the economy. No individual, household, or firm needs to take into account any tax complications that arise from their economic decisions and activities. The tax system is designed for the sole purpose of collecting revenue, not for social manipulation of individuals or firms.

2. The flat tax is pro-investment because it permits 100%, first-year writeoff of all investment.

3. The flat tax is non-discriminatory, in that it treats every individual, household, and firm exactly the same. It is fair in this regard. This is an important point of principle, namely, that of enhancing individual economic freedom. The flat tax does not punish success.

4. The flat tax is the essence of tax simplification. It…...

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Bibliography

Auerbach, Alan J. (1997). The Future of Fundamental Tax Reform. AEA Papers and Proceedings 87, 2: 143-46.

Boessenkool, Ken, Herb Grubel, and Jim Silye (1995). A Flat Tax for Canada. Unpublished paper presented to the Flat Tax Conference (the Fraser Institute), Toronto.

Bradley, Bill (1984). The Fair Tax. New York: Pocket Books.

Branch, Ben. (2004). The Flat Tax: How to Fix it. University of Massachusetts.

Flat Tax over the Current Tax
Policy

The focus of this paper is to demonstrate effectiveness of flat tax over the current tax rate. Presently, the U.S. government employs progressively tax law as the current tax policy. Under the current tax policy, the government increases taxes with increase in income. Analysis of the current tax policy reveals that the tax system is very complicated to understand because corporate organizations face multiple taxations in a fiscal year. Moreover, the current tax forms are very complicated for an ordinary taxpayer to understand. Based on the complications associated to the current tax policy, this paper proposes the flat tax policy that will make all businesses and individuals to pay equal tax rate. The paper provides several benefits of flat tax policy over the current tax system. For example, the flat tax will adopt the basic principle of taxation. The tax returns of the proposed…...

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References

AICPA (2001). Guiding Principles of Good Tax Policy: A Framework for Evaluating Tax Proposals (Report No. 1). New York: American Institute of Certified Public Accountants.

Bressler, M.S. Bressler, L. & Serrato, D. (2010).Tax reform and small business: the potential impact of flat tax legislation. Research in Business Economic Journal.

Brown, P. (2013). Progressive U.S. Tax Code is an Illusion, Targeted News Service [Washington, D.C] 14 Jan 2013.

Bureau of Labor Statistics (2013). Tax Rates . Bureau of Labor Statistics, USA.

orks Cited

Thorndike, Joseph J. "The IRS Is Hiding Its History." The ashington Times.

December 19, 1997, p. A23. February 18, 2008. http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/9de7fcd59915a3be85256e430079327d?OpenDocument

Question

After 9/11, the Federal Reserve Bank, then led by Alan Greenspan, used monetary policy reduced the interest rate, or the rate that consumers must pay to borrow money. This did encourage individuals to spend more. However, it is still debatable if this was the most vital component in extricating America from the throws of economic recession. Government spending, or fiscal as opposed to monetary policy, is often seen as a more direct and superior way to rapidly change economic conditions. Fiscal policy was required to stimulate America's recovery from the Great Depression, according to conventional wisdom, although some still argue that it was the Hoover administration's monetary policy that was ineffective, not that monetary policy was ineffective altogether.

But most economists believe that, to get the economy 'moving' again, spending by…...

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Works Cited

Heakal, Reem. "What is fiscal policy?" Investopedia. October 22, 2008.  http://www.investopedia.com/articles/04/051904.asp 

Question

Fairness does matter when creating a tax system. In terms of a consumption tax, the poor often consume more than the rich, at least in terms of a percentage of their income. While for a wealthy individual, much of his income can be locked up in assets, making money off of money, for a poor individual, the bulk of his or her income is devoted to buying necessary goods, including rent and food. The consumption tax taxes everyone equally on the surface, regardless of how someone has benefited from the economic system of a particular society, and actually favors those who can allocate their income to sectors of the economy that are not taxed (such as investments, which are not technically consumption).

A flat tax, where everyone pays the same amount, has similar problems in terms of allocating wealth. 15% of a poor person's income, a person who must pay for his or her rent, food, and necessities out of his or her weekly paycheck, means more to that individual than 15% of an income where much of that income can be devoted to investments and luxuries. While not as unfair as a consumption tax as investment income is also taxed, a flat tax is still unfair, and finding the right percentage to finance government operations yet not to be prohibitively costly for the poorest members of society is a difficult balance to strike. The only good thing about the flat tax is its simplicity, as along with the consumption tax as it requires less bureaucracy to enforce. Bureaucracy is expensive as well as frustrating (as anyone who has ever had to fill out a tax form beyond the standard EZ-file well knows!).

American Tax System vs. Other Countries
The federal government first imposed an individual income tax in 1862 as an emergency means of financing the Civil ar. It also established the Bureau of Internal Revenue, predecessor of the Internal Revenue Service. Tax rates were 3% on income from $600 to $10,000 and 5% on income above $10,000. Later in the war the maximum rate increased to 10% of income." (Encarta)

My how times have changed. This paper will compare the tax systems of four different countries to the American tax system. The four countries that have been chosen are South Africa, Mexico, Hong Kong, and New Zealand..

First lets attempt to briefly (if that were possible) explain the American tax system.

The American Tax System

America has a progressive tax system meaning the greatest tax burden is on people who have the most income. The American tax system can be described as long and complicated. The…...

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Works Cited

Corporate Service Center. "Federal Tax Rates." April16, 2002http://www.corporateservicecenter.com/Corp/federal_tax_rates.htm.

Film New Zealand. "New Zealand's tax Environment." Jan. 2002  http://www.filmnz.com/filmnz/Content/Production/Development/Taxation/Taxation.html 

Flags of the World.   April17, 2001http://www.crwflags.com/fotw/flags/mx.html .

Henry, Aaron. "The South African Tax System: A Nation is Microcosm." Dec. 6,1999:

Naturally, to the extent the AMT applies to the specific segment of taxpayers to whom it was initially addressed, it is serves a beneficial purpose; on the other hand, that benefit must be considered against the unintended consequences and unfairness of its application to taxpayers completely outside the ranks of the very wealthy, particularly at the lower end of that income category. Undesirable Consequences:
The first major potential problem with the AMT is that it does not incorporate inflation at all; as a result, it applies to more and more taxpayers every year despite the fact that their wealth actually remains unchanged during that time. This is particularly important in times of economic recession, especially where income increases fail to keep pace with rising inflation. Whereas the AMT applied to a fewer than 200 households when first implemented in 1970, it currently affects as many as 15% of households earning…...

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References

Congressional Budget Office. (2004). Revenue and Tax Policy Brief: Alternative Minimum Tax.

Leiserson, G. (2008). The Individual Alternative Minimum Tax: Historical Data and Projections. "http: Brookings Institution.

The New York Times. (2007). Times Topics: Alternative Minimum Tax. (Dec. 6/07).

Tax Analysis
In Pennsylvania taxation is a huge issue, much like in the rest of the United States. arring factions on either side of the political agenda work to either raise or cut taxes within a given year. In times of economic crisis, such as is occurring in the United States at the present has forced citizens and government officials to reexamine taxation practices in the hopes of overturning the depression. In additional to federal taxes, businesses and individuals of the U.S. are required to pay taxes to the state and to their local communities (Financing page 458). State taxation can be extraordinarily high. It has been proven that many states have higher corporate tax rates than several countries of the world. hen comparing Pennsylvania to other states in the country, it becomes apparent that the current tax rate is exorbitant and putting a great deal of pressure both on…...

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Works Cited:

"Financing Government Expenditures."

"The Tax Foundation: Pennsylvania." (2009). Retrieved from  http://www.taxfoundation.org/taxdata/show/477.html

Federal Tax Current Event
The current epublican leadership race has seen Herman Cain as a front-runner for leadership of the epublican Party and thus, a potential presidential candidate for the 2012 election. One of the main components of his campaign is his proposal of a flat taxation plan for citizens of the United States, known as the "9-9-9" tax plan. This plan proposes to replace the current federal tax code with a flat taxation plan of 9% national sales tax, 9% personal income tax, and 9% corporate tax across the board for all Americans. In the article "Herman Cain's murky 9-9-9 tax plan," the author argues that this plan simply would not fiscally work out and that it would lead to an unfair distribution of the tax burden (Hitzlik, 2011).

Hitzlik argues that flat taxation plans such as the one proposed by Cain tend to not result with their positive intended outcomes,…...

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Reference

Hiltzik, M. (October 18, 2011). Herman Cain's murky 9-9-9 tax plan. Los Angeles Times. Retrieved 12 November, 2011 from  http://articles.latimes.com/print/2011/oct/18/business/la-fi-hiltzik .

Flat (2006), Thomas Friedman describes the new global capitalist economy and how it has affected the United States, as well as the type of skills and education that will be most in demand in the 21st Century. Even white-collar workers, managers and engineers have been doing poorly because of globalization, while unskilled and semiskilled blue-collar workers have been devastated. Construction and manufacturing workers with only a high school education have been losing ground in wealth and incomes to the elites for the last thirty years. This era has been far better for the creative and imaginative designers of new technologies than those performing routine tasks. For the last ten years, the majority of Americans were surviving through inflated credit, mortgage and asset bubbles, but when these collapsed in 2008-09 their true economic situation became stark. Friedman's main thesis is that those workers with flexible, adaptive, creative skills who can…...

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REFERENCES

Friedman, T.L. (2006). The World Is Flat: A Brief History of the Twenty-First Century. NY: Farrar, Strauss and Giroux.

Friedman, T.L. (2009). "The New Untouchables" New York Times, October 21, 2009.

West, C. (1993, 2001). Race Matters. Boston: Beacon Press.

tax system of one country with that of another is an exercise fraught with dificulties and ultimately doomed to failure . tax system will never be much more than a reflection of strongly national cultures and forces. discuss this statement in the light of your knowledge of comparative tax system in developing and/or developed countries i
Tax Systems

The following pages focus on analyzing the factors of influence on different countries' taxation systems. The paper begins with an introductory section that allows readers understand the point-of-view used in this paper. The following section refers to describing the taxes pand taxation systems used by most countries and their objectives, in order to understand the similarities and differences between these taxation systems. The paper continues with the analysis of several factors that influence countries' tax system design, like cultural factors, technological developments, and natural resources. In order to exemplify this, the taxation systems…...

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Reference list:

1. Pasekova, M. et al. (2011). Comparative Analysis of Tax Systems: Some Evidence from CEE Countries. World Academy of Science, Engineering, and Technology. Retrieved February 27, 2012.

2. Greenhouse, S. (2011). Tiny Tax on Financial Trades Gains Advocates. The New York Times. Retrieved February 28, 2012 from  http://www.nytimes.com/2011/12/07/business/global/micro-tax-on-financial-trades-gains-advocates.html?_r=1&pagewanted=all .

3. Ross, M. (2004). Does Taxation lead to Representation? Cambridge University Press. Retrieved February 28, 2012.

4. Seto, T. (2008). Four Core Principles of Tax Design System: Introduced and Applied to the Taxation of Multinationals. Loyola Law School. Retrieved February 28, 2012.

Outsourcing has shown that the quality of work does not diminish even if someone who lives at the side of the world does the work. This situation is largely dependent on the amount and quality of investment in enriching human capital in the developing world, i.e. through a more relevant curriculum, which matches the needs of the labor market.
Off shoring, on the hand, works differently. Friedman noted that off shoring involves the transfer of one factory to another place that produces the same product, in the very same way, only with cheap labor, lower taxes, subsidized energy and lower health cost. Competition among offshore sites now persists as manufacturing centers are now transferred to the developing countries. In my view, to some extent off shoring has led to a degree of exploitation especially to its low skilled labor sector. Paying its workers on subsistence, multinational companies could opt to…...

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Supply sharing is a method of collaborating horizontally among suppliers, retailers and customers to create value. Friedman mentioned the coefficient of flatness -- the fewer natural resources one's company/country, the more you will dig inside yourself for innovations in order to survive. This particular concept brings into mind Rostow's - age of high mass consumption - the rise of consumerism which leveled the globe and is attributed largely to the increasing influence of capitalism. This however, is constrained by the purchasing power of people from developing countries. Consumerism has transformed the cultural mindset in that their needs are now conditioned by the product and service line as prescribed by the west.

Globalization, which I would want to define as the encompassing transformative and catalytic character of technological advances has over the past decade ushered in a new wave of transactional arrangements between sovereign states and transnational entities. Globalization has led to the reconfiguration of hierarchical structures of interaction as the flat world is seen over the horizon. Globalization is predicated on innovation, if a firm or country cannot innovate or integrate the necessary measures to increase its competitiveness then it stands to lose in a highly predatory environment. While globalization, may be looked upon on negative perspective that is it would lead to the demise of uncompetitive small and medium firms, looking at it on hindsight it should serve as an impetus on their part. Lulling them out of their complacency by offering a value added component in their goods and services. Closing your doors to the world and waiting for domestic industries to develop would be counterproductive. Subsequently, integration has evolved into a necessity rather than an opportunity. The critical aspect is to prepare ourselves, equipping the human capital with the right skill and indoctrinating them with a good work ethic, which would transform the workforce into knowledge workers. Although this may be a Herculean task, making some incremental reforms on a sustained basis would translate to substantive gains over the long-term. Globalization would not wait for the weak. Summing it up in four words, the time is now.

Friedman, Thomas. The World is Flat a Brief History of the Twenty First Century-Updated Release 3.0. New York: Farrar, Straus and Giroux. 2007.

Tax Avoidance & Firm Growth
What follows in the next few pages is a review of whether there is a correlation between tax avoidance with corporations and firm growth. Indeed, looking at the literature reveals that the evidence is mixed but that the overall answer is a condition "yes," that there can indeed be a link between tax avoidance and firm growth. To explain the conditional nature of the answer garnered, one can look to the work of Desai, Foley and Hines (2006) when they assert that "firms with sizable foreign operations benefit the most from using tax havens, an effect that can be evaluated by using foreign economic growth rates as instruments for firm-level growth of foreign investment outside of tax havens" (Desai, Foley & Hines, 2006). They further state that "one percent greater sales and investment growth in nearby non-haven countries is associated with a 1.5 to 2% greater…...

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References

Chang, S. (2012). The Great Debt Controversy in the U.S. And Beyond. SERI

Quarterly, 5(2), 50-62.

Desai, M.A., & Dharmapala, D. (2006). Corporate tax avoidance and high-powered incentives. Journal Of Financial Economics, 79(1), 145-179.

doi:10.1016/j.jfineco.2005.02.002

ather than being idle and receiving public benefit, individuals of working age typically prefer completing useful work. Mark P. Altieri, an associate professor of accounting at Kent State University, Kent, Ohio, and Jason A. othman, (2006), an associate at Wickens, Herzer, Panza, Cook and Batista, note a number of enhancements to WOTC in the article, "Surviving Katrina: Tax breaks for victims of the costliest catastrophe in American history."
According to Altieri and othman (2006), in regard to the WOTC - general law, under IC section 51, the WOTC provides motivation for employers to hire economically disadvantaged individuals. These disadvantaged individuals include qualified ex-felons, food-stamp recipients, veterans, summer youth employees, as well as individuals who receive certain welfare benefits (Altieri & othman, ¶ 23). Altieri and othman explain that in the past, the WOTC -- Katrina was expanded to embrace individuals whose principal residence on August 28, 2005, was located in…...

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REFERENCES

Altieri, M.P., & Rothman, J.A. (2006). Surviving Katrina: Tax breaks for victims of the costliest catastrophe in american history. Journal of Accountancy, 201(2), 58+. Retrieved June 1, 2009, from Questia database:  http://www.questia.com/PM.qst?a=o&d=5013771777 

Anonymous. (2008). Special tax credit aids Paulding Co. development. Toledo Business Journal.

Telex Communications, Inc. Retrieved June 01, 2009 from HighBeam Research:

  Battersby, M.E. (2009). The Memorial Day tax surprise. Metal Center News. Sackett Businesshttp://www.highbeam.com/doc/1P3-1619413051.html 

global tax treaties, UN model and OECD model with the view of analyzing their consideration towards rights to capital and tax income. By throwing light on differences and similarities among the models, the fundamental logic of each of them is explained. The article explains the prospecting policies of consideration when tax treaties are to be signed. It is because there is strong need to enforce a flexible but more aggressive strategy. The Section 1 of the article discusses rights about tax earnings through immovable property. The Section 2 is about business profits. The Section 3 throws light upon income from investment channels like royalties, interests and dividends. The Section 4 describes the capital gains. The conclusion of the article is given in Section 5.
ight to tax income from immovable property

Because of well-known significant relationship between the country of source of the income and the source of income itself, there…...

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References

Bin Yang, A Comparative Study on the Rules and Administration of the International Taxation System (China Tax Publishing House, 2003).

Bin Yang, International Taxation (Fudan University Press, 2004).

Commentaries on Paragraph 3, Article 7 of the OECD model.

Jin Zhi Liu (translator), Commentaries of UN model Tax Convention between Developed and Developing Countries (China Financial & Economic Publishing House, 1996) 56.