Incidence of Income Tax Term Paper Example | Topics and Well Written Essays - 1500 words

Incidence of Income Tax - Term Paper Example Under the progressive income tax policy (a progressive tax takes a larger share of the income of high-income taxpayers than of low-income taxpayers).   The incidence of the tax is shifted more on the high-income group than to the low-income group (Samuelson and Nordhaus 1992). Following are the effects of taxation on income: Under progressive income tax policy, ya family with $50,000 income is taxed more than one with $20,000 of income. Not only does the higher-income family pay a larger income tax, but it in fact pays a higher fraction of its income. Such income tax policies are aimed to minimize the distortions between haves and have-nots. It influences the consumption patterns of higher-income families and affects overall consumption patterns of an economy. On the other hand, progressive income taxation policies are politically controversial issues and are regularly used in electoral campaigns. A larger share of the burden of VAT falls upon the consumers because the producer/manufacturer (VAT registered persons or companies) pass on the financial impact of such a tax on to the consumers. Suppose that a product, say the laptop, has been imposed a VAT. The burden of this tax imposition will not be born by the supplier or manufacturer of the laptops rather it will be passed on to its customers by raising the price of laptops by the percentage of the tax imposed. The ultimate consumer bears the burden of VAT and it’s him whose consumption is being affected through a value-added tax. Advantages: Registration for VAT makes an overall good impression for your company. Since large corporations usually register for VAT, therefore, if a newly established company registers itself for VAT, the customers, and for that matter suppliers, heed it as an established, large company. Registration for VAT also has financial benefits. If a newly-established company registers for VAT then it automatically avoids the penalties for non-registering when it becomes legally mandatory to register for VAT. It is a precautionary step.

Question 2,6,7 Essay Example | Topics and Well Written Essays - 2500 words

Question 2,6,7 - Essay Example Firm diversification is a central issue of importance to managers. The research literature on the subject of diversification affirms that over the past two decades the growth in the globalization of markets and products by firms has been tremendous. Globalization as a concept is used often to imply a condition of increased mutual interdependence among nations. The given condition depends on a number of factors. First, there is decreased governmental policy on trade barriers. Second, free international movement of capital across borders. Third, there is high volume of foreign direct investment. Fourth, there is migration of the workforce across the borders. Finally, there is exchange of services and goods among the nations involved in trade. However, despite the recorded increase in diversification by firms, the definite factors that contribute to diversification remain debatable among firm managers. The drivers of a firm’s diversification decision-making process can be explained with the aid of two theoretical frameworks. Namely, the Resource Based View and the Transaction Cost Theory. The resource-based view theory offers an understanding of the choice of industries into which a firm diversifies. According to the theory, a firm is best viewed as a collection of resources that enable it to compete against other firms. The theory suggests that the potential of a firm to gain and maintain a sustained competitive advantage relies on its defined resources (Wierseme, 2008). Firms that have the ability to develop unique and difficult to imitate resources, are more likely to engage in diversification compared to other firms with no such unique and inimitable resources. The transaction cost theory of strategic management also offers an understanding of firms drivers for diversification. The theory holds that firms diversify when the firms’ activities can be performed cheaply within the company,