Transcript Taxes and budget - Politechnika Wrocławska

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To tax (from the latin taxare) is to impose a
financial charge or other levy upon a taxpayer
(an individual or legal entity) by a state or the
functional equivalent of a state.
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Direct taxes - these are the taxes
person/corporation pays directly, i.e. no
intermediary involved. These taxes are directly
collected by Government from the
person/corporation concerned. The person/corp.
knows the exact tax liability in this case.
Indirect taxes - these taxes are taxes on
consumption. One pays these taxes buying
goods, unaware of the exact amount that it
would contribute to. The burden of these taxes
are shifted from manufacturer to consumer. It’s
an unavoidable burden. Example of this tax
would be excise duty.
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Income tax
◦ An income tax is a tax levied on the financial income of
persons, corporations, or other legal entities.
◦ Various income tax systems exist, with varying degrees
of tax incidence.
◦ Income taxation can be progressive, proportional, or
regressive.
◦ When the tax is levied on the income of companies, it is
often called a corporate tax, corporate income tax, or
corporation tax.
◦ Individual income taxes often tax the total income of the
individual (with some deductions permitted), while
corporate income taxes often tax net income.
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Personal income tax
◦ progressive:
 to 85 528 PLN 18% (minus 556,02 PLN),
 above 85 528 PLN 32%
◦ proportional: 19%
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Corporation tax
◦ proportional: 19%
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In 2011 you will earn 100 000 PLN. How
much personal income tax should you pay?
tax  18 %  85 528 PLN  32%  (100 000 PLN - 85 528 PLN) - 556,02 PLN
tax  15395,04 PLN  4631,04 PLN - 556,02 PLN
tax  19470,06 PLN
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Wealth tax
◦ is generally conceived as a direct tax on all
household wealth holdings, including owneroccupied housing; cash, bank deposits, money
funds, and savings in insurance and pension plans;
investment in real estate; and corporate stock,
financial securities, and personal trusts.
◦ Because of the broad term "wealth", property tax,
capital transfer taxes (inheritance tax, estate tax,
gift tax), endowment tax and capital gains taxes are
also sometimes referred to as "wealth taxes".
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value added tax – VAT
◦ is a consumption tax levied on value added. In
contrast to sales tax, VAT is neutral with respect to
the number of passages that there are between the
producer and the final consumer; where sales tax is
levied on total value at each stage. A VAT is an
indirect tax. People are generally not aware of how
much VAT they pay.
◦ Maurice Lauré, was first to introduce VAT on April
10, 1954. Initially directed at large businesses, it
was extended over time to include all business
sectors.
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standard rate of VAT 23%
reduced rates of VAT:
◦ 8%, 5% for: drugs, books, toys, food etc.
◦ Rate 0%, for:
 delivery of goods within the EU,
 export.
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Different rates of VAT apply in different EU
member states.
The minimum standard rate of VAT
throughout the EU is 15%, although reduced
rates of VAT, as low as 0%, are applied in
various states on various sorts of supply (for
example, newspapers and certain magazines
in Belgium).
The maximum rate in the EU is 25%.
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http://en.wikipedia.org/wiki/European_Union
_Value_Added_Tax
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Consider the manufacture and sale of any item
With a 10% VAT:
The manufacturer pays $1.10 ($1 + $1x10%) for the raw materials, and the seller
of the raw materials pays the government $0.10.
The manufacturer charges the retailer $1.32 ($1.20 + $1.20x10%) and pays the
government $0.02 ($0.12 minus $0.10), leaving the same profit of $0.20.
The retailer charges the consumer $1.65 ($1.50 + $1.50x10%) and pays the
government $0.03 ($0.15 minus $0.12), leaving the profit of $0.30 (1.65-1.32.03).
So the consumer has paid 10% ($0.15) extra, compared to the no taxation scheme,
and the government has collected this amount in taxation. The businesses have
not lost anything directly to the tax. They do not need to request certifications
from purchasers who are not end users, but they do have the extra accounting to
do so that they correctly pass on to the government the difference between what
they collect in VAT (output VAT, an 11th of their income) and what they spend in
VAT (input VAT, an 11th of their expenditure).
Note that in each case the VAT paid is equal to 10% of the profit, or 'value added'.
The advantage of the VAT system over the sales tax system is that businesses
cannot hide consumption (such as wasted materials) by certifying it is not a
consumer.
Excise
◦ Excise duty is a tax levied on the producer of certain goods,
commodities and activities.
Excise duty was originally invented for some or all of the
following reasons:
 to protect people
◦ from harming their health by abusing substances such as tobacco and alcohol, thus
making excise a kind of sumptuary tax
◦ from harming those around them and the general environment, both from overuse of
the above-mentioned substances, and including curbing activities contributing to
pollution (hence the tax on hydrocarbon oil and of other environmental taxes, as in
the UK), or from harming the natural environment (hence the tax on hunting)
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to provide monies needed
◦ for the extra healthcare and other public expenditures which will be needed as a
direct or indirect result of excisable activities, such as lung cancer from smoking or
road accidents resulting from drink-driving
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to punish – many US states impose taxes on drugs,
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INADEQUATE INCOMES
LOW WAGES
HIGH PRICES
SHODDY PRODUCTS
PRODUCT UNAVAILABILITY AND
DISCONTINUATION
LOST JOBS
FORECLOSURES, EVICTIONS, AND HOMELESSNESS
POVERTY AND HIGH CRIME
CHRONIC RECESSION
LOW REAL TAX REVENUES
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INADEQUATE INCOMES
The total outcome of all of the effects listed below is a large tax
burden. And only workers feel the brunt of this burden, because
only workers create wealth. When all of these effects are
combined, the tax burden on the average worker is currently
about 73 percent of income. So people can't live on their
incomes.
LOW WAGES
Multiple governments levy so many taxes on businesses that
"taxes" is the highest budget items on the ledger sheets of most
businesses. These taxes take away some of the money otherwise
used to pay wages. So employers can't pay good wages.
HIGH PRICES
Multiple governments levy so many taxes on businesses that
businesses have to raise prices to get money to pay these taxes.
So product prices go up. This leads to inflation.
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SHODDY PRODUCTS
Multiple governments levy so many taxes on businesses that these taxes
take away money otherwise used to improve quality. Instead, businesses
must cut corners to make the products and pay the high taxes. Many
recalls are the results of businesses cutting too many corners, to save
money so they can pay the high taxes.
PRODUCT UNAVAILABILITY AND DISCONTINUATION
Because high taxes cost businesses more, they can't provide as many
products as they used to be able to. Property taxes make it expensive to
stock products with lower quantities demanded. And manufacturers
can't afford to produce the low-demand products and also pay their
taxes. The result is that people with allergies to the mainstream
products can't buy any products they can use.
LOST JOBS
Many businesses go bankrupt, because they can't afford to operate after
government takes it’s cut. Other businesses flee the country, to escape
the high taxes. And still other businesses must cut their payrolls to stay
within their incomes. The result in each case is the loss of jobs those
businesses provided in the economy.
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FORECLOSURES, EVICTIONS, AND HOMELESSNESS
Because taxes are so high, people who originally entered into mortgages
or rental contracts with the ability to pay them now no longer have the
money to pay the monthly payments. And if the taxes are not paid
instead, bank quickly seizes the property and sells it at auction. Thus,
high taxes cause foreclosures and evictions.
With the foreclosure or eviction comes homelessness, because these
victims of government greed can no longer afford to pay rent or
mortgage payments. So high taxes cause homelessness.
POVERTY AND HIGH CRIME
Because more people can't afford to live on their incomes, the poverty
rate goes up. This causes an additional drain on the budgets of
government social programs. This means that each poor person can't
get enough to live on.
Many poor people, unable to find jobs because government overtaxed
the economy, turn to crime to get the money needed to support their
families. This causes the crime rate to go up. And since many of those
crimes are robberies, the violent crime rate goes up too.
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CHRONIC RECESSION
The high taxation takes so much away from the economy that it
enters a permanent form of recession. If government tries to
boost the economy with increased government spending, the
result is stagflation (simultaneous high inflation and
unemployment) instead of prosperity. The only cure for
stagflation is to cut both taxes and government spending.
LOW REAL TAX REVENUES
The permanent recession and losses of jobs caused by the high
taxes cause a drop in government revenue, as economic
production drops. If government then raises tax rates to recoup
the lost revenue, production drops again, and the revenue drops
even more. In addition to this, the increase in prices caused by
the increased taxation prevents government spending from
purchasing as much. So high tax rates cause lower real tax
revenue collection.
Stop asking for more from government. You will regret getting
what you asked for.
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A government budget is a legal document that is
often passed by the legislature, and approved by
president.
The two basic elements of any budget are the
revenues and expenses.
Revenues are derived primarily from taxes.
Government expenses include:
◦ spending on current goods and services, which
economists call government consumption;
◦ government investment expenditures such as
infrastructure investment or research expenditure;
◦ transfer payments like unemployment or retirement
benefits.
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A budget deficit occurs when a government
spends more money than it takes in.
The opposite of a budget deficit is a budget
surplus.
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Government debt (also known as public debt
or national debt) is money (or credit) owed by
any level of government; either central
government, municipal government or local
government.
Governments usually borrow by issuing
government bonds.
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http://www.geocities.com/midimagic@sbcglo
bal.net/taxefect.htm
www.wikipedia.org
Kwaśnicki W., „Zasady ekonomii rynkowej”,
Wydawnictwo Uniwersytetu Wrocławskiego