ADMS 3810 Lecture Notes - Lecture 6: Sales Taxes In Canada, Real Estate Transfer Tax

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pucewildebeest131

3 Feb 2014

School

York University

Department

Administrative Studies

Course

ADMS 3810

Professor

unknown

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Document Summary

Equity the basic rule of equity in taxation is the equal treatment of equals. Benefits received under this principle equity is interpreted as requiring that the burden of taxation be allocated among taxpayers in relation to the benefits each derives from public services. Ability to pay under this principle equity requires the equal treatment of individuals possessing the same capacity to pay taxes. Adequacy a tax system must be capable of providing the flow of funds that a government requires in any given period. Flexibility a tax system should allow discretionary action to increase or decrease the flow of funds as required. Elasticity a tax system should have taxes whose yield respond to changing economic circumstances with deliberate changes in rates. Balance the need for a balanced plurality of taxes is grounded in the requirements of flexibility and elasticity, partly in equity and partly in administrative considerations. Neutrality taxes should result in the least price distortion possible.

Related Questions

Henry told us in his guide to the Institutional Framework of Taxation in Australia that the Australian Taxation System is one of the most complex in the world and is made up of approximately 125 taxes including taxes such as Income Tax, Capital Gains Tax, Fringe Benefits Tax and Goods and Services Tax just to name a few. He also mentioned that there are many different organisations that play different and varied roles within this system to ensure its integrity and all Australians are equally treated with equity.
The Australian Taxation System is embedded in the way of life for all Australian taxpayers, we pay tax on our income, we pay tax when we purchase goods and use services, we pay tax when we sell assets and this is just to name a few but in return the Government provides services and benefits e.g. hospitals, schools, defence, and financial assistance to those in need etc.
As we know the government relies very heavily on the revenue from taxation to be able to finance its activities and services it offers to the public and reforms on taxation are often a focus of governments. An area of taxation reform that is constantly under review is a rise in the current GST rate or broaden the GST base (e.g. make basic foods taxable). Many feel that this would solve some of the governmentâs financial woes, whilst other are adamantly against any rise or broaden of the tax base. This is a very political issue and is extremely topical as the government, opposition and the premiers of the Australian States/Terrorities are engaged in heated debates regarding the issue of GST and its possible reform.
The assessment requires you to review this topical area of taxation (GST Reform).

Some views may be that it is not unreasonable to raise the GST rate as compared to other OECD countries the Australian rate is very low, that broadening the tax base will make GST a simpler tax remembering that businesses are responsible for its collection and a more simply system will lessen their burden. Others may view it as that the GST rate should not be raised or the base broaden as it will cause more financial stress on some areas of the public, it may be the view that it is too much of a problem politically for a government to introduce changes to GST especially as we head into an election year â¦.. WHAT WILL YOUR VIEW BE?
The requirements of the assignment for part two is to produce a 1000 to 1500 word essay on your opinion of this topic

First discussion question

Read the belowAICPA article.

President Barack Obama releasedhis last proposed budget, for the governmentâs 2017 fiscal year,on Tuesday February 9. Itcontains tax provisions affecting education, health care, andretirement, as well as proposing extensive changes affectingbusinesses. Many of the changes and areas should now be familiar toyou - Sec. 179, reducing tax benefits for high-income taxpayers,simplified accounting for small businesses, incentives to bringjobs back to America, and last week's discussion of foreign earnedincome for corporations.

Pick a few of the proposals youagree with, plus several you disagree with, and discuss thereasons?

Second Final Question<

First, there is no such thing asa tax "loophole" - they are called deductions. Remember that ALLincome is taxable, unlessspecifically excluded by law. And ALL expenses are disallowedunless specifically included by law.

We have a tax system that triesto modify taxpayer behavior by changing the tax rates on income,and by allowing or disallowing certain types of deductions. But ourtax system is not collecting enough revenue to cover governmentexpenditures. Some think corporations are paying too much, but ifthey don't pay, then the individual taxpayer has to pay. However,as we now know, the individual taxpayer already carries themajority of the tax burden, and if the wealthiest don't pay theirfair share, the middle and lowest earners have to pay. The bottomline is someone has to pay - the question is how to make thatequitable. Is it as simple as having a flat tax forindividuals?

AICPAARTICLE

Presidentâs budget proposes manytax changes By Alistair M. Nevius, J.D. February 9, 2016President Barack Obama released hislast proposed budget, for the governmentâs 2017 fiscal year, onTuesday. It contains tax provisions affecting education, healthcare, and retirement, as well as proposing extensive changesaffecting businesses. The budget presents a wish list of changesthe administration would like to see enacted; however, theRepublican-held Congress is unlikely to support much of thepresidentâs plan. Among the many proposed tax changes are thefollowing: Earned income tax credit The budget proposes expandingthe Sec. 32 earned income tax credit for taxpayers who do not havea qualifying child (including noncustodial parents). The amount ofthe credit available to these taxpayers would increase to roughly$1,000. The credit would also be made available to workers who areages 21â24 and ages 65 and 66. It also would create a newsecond-earner tax credit of up to $500 for married couples in whichboth spouses work. The credit would be phased out for couples whoseadjusted gross income (AGI) exceeded $120,000. Child and dependentcare credit The budget would essentially triple the amount of thechild and dependent care credit to $3,000 per child for familieswith children under the age of 5. It would also increase thephasedown limit so that it does not apply to taxpayers with annualAGI of less than $120,000. (The credit is currently phased down fortaxpayers with AGI above $15,000.) However, the budget would alsoeliminate flexible spending accounts for child care expenses.Education credits The budget proposes folding the Sec. 25A lifetimelearning credit into the American opportunity tax credit. It wouldalso expand the American opportunity tax credit to make itavailable for five years and refundable up to $1,500. (Currently,it is available for four years and is refundable up to $1,000.)Pell Grants would be exempt from taxation and from the Americanopportunity tax credit calculation, and student loan forgivenesswould no longer be considered to result in taxablecancellation-of-debt income. Community colleges The budget wouldcreate a new $5,000 tax creditâcalled the community collegepartnership tax creditâfor employers that help community collegesfill their investment shortfalls and that hire qualifying communitycollege graduates. Presidentâs budget proposes many tax changesPage 1 of 4http://www.journalofaccountancy.com/news/2016/feb/budget-proposes-many-tax-changes-201613856.html2/10/2016 The budget calls for funding of a program calledAmericaâs College Promise that would create a federal-statepartnership to make two years of community college free. Retirementsavings The proposed budget includes a number of proposals that aredesigned to increase access to retirement plans and to makeportability of retirement savings and benefits easier. Theseinclude requiring employers with more than 10 employees that do notoffer a retirement plan to automatically enroll their employees inan IRA. Businesses with fewer than 100 employees would get taxcredits of up to $4,500 for offering automatic IRA enrollment.Reducing tax benefits for high-income taxpayers The budget wouldlimit the value of certain deductions and exclusions from AGI andall itemized deductions. The proposal would reduce to 28% of thevalue of the specified exclusions and deductions that wouldotherwise reduce a taxpayerâs taxable income in the 33%, 35%, or39.6% tax brackets. The definition of net investment income wouldbe expanded to include gross income and gain from any trades orbusinesses of an individual that is not otherwise subject toemployment taxes. The budget also proposes an implementation of theso-called Buffett rule (called a âFair Share Taxâ in the budget),which would require high-income taxpayers to pay at least a 30% taxrate (after charitable contributions). Capital gains tax Under thebudget, the maximum capital gains tax rate would increase to 28%(inclusive of the 3.8% net investment income tax). It would alsoeliminate basis step-ups on gifts and bequests by treatingtransfers of appreciated property as a sale, so that the donor or deceased owner wouldrealize a capital gain on the transfer. The budget would also taxcarried interests at ordinary income tax rates instead of ascapital gain. Corporate tax reform The budget would cut thecorporate tax rate to 28%. It would also impose a 19% minimum taxon foreign earnings, which would be imposed when the earnings areearned. As a transition to the minimum tax, previously untaxedforeign income would be subject to a one-time 14% tax. The budgetwould also provide further rules against earnings stripping andcorporate inversions. Incentives to bring jobs to the United StatesThe budget proposes to provide a tax credit equal to 20% ofeligible expenses to businesses that reduce or eliminate a line ofbusiness currently conducted overseas and start up, expand,or otherwise move the same trade orbusiness to the United States. Sec. 179 expensing The budgetproposes increasing the maximum Sec. 179 expensing limitation to $1million and to index it for inflation (the phaseout threshold wouldremain $2 million, indexed for inflation). Simplified accountingfor small business Presidentâs budget proposes many tax changesPage 2 of 4http://www.journalofaccountancy.com/news/2016/feb/budget-proposes-many-tax-changes-201613856.html2/10/2016 The proposed budget would create a uniform small businessaverage annual gross receipts threshold of $25 million for allowingexceptions from certain accounting rules. Eligible businesses wouldbe allowed to use the cash method, avoid the uniform capitalizationrules, and use an inventory accounting method that either conformsto their financial accounting method or otherwise properly reflectsincome. Startup expenses Under the budget proposal, the limit ondeductible startup expenses would be increased to $20,000 (from$5,000). This amount would be reduced (but not below zero) by theamount by which those expenditures exceed $20,000 (currently$50,000). Research credit The budget would do away with the currentbifurcated Sec. 41 research credit, under which eligible taxpayerscan claim either a 20% regular credit or a 14% simplified credit.Instead, the budget proposes to create a single formula with acredit worth 18%. Increase intobacco tax The budget would increase taxes on tobacco to fund aninitiative to expand access to preschool and to expand homevisiting programs by nurses, social workers, and otherprofessionals. Clean energy The budget would simplify, expand, andmake permanent several tax incentives for clean energy investment.It would also create two new tax credits to provide an incentivefor commercial deployment of carbon capture, utilization, andstorage. The budget would also eliminate $4 billion a year in taxsubsidies to oil, gas, and other fossil fuel producers. Cadillactax The budget proposes changes to the Sec. 4980I excise taxon high-cost employer-sponsored health coverage (known as theCadillac tax). The Cadillac tax has been the focus of repealefforts in Congress, and the recently enacted ConsolidatedAppropriations Act, 2016, P.L. 114-13, postponed its effective dateto 2020. (It was originally scheduled to take effect in 2018.)Under the proposal, the threshold above which the tax applies wouldbe modified to be equal to the greater of the current law thresholdor the average premium for a marketplace gold plan in each state.This is designed to protect employers from paying the tax justbecause they are in a high-cost state. Estate tax The budgetproposes to revert the estate tax to its form in 2009, with a 45%tax rate, a $3.5 million exclusion amount for estate andgeneration-skipping transfer tax purposes, and a $1 million gifttax exclusion (with no indexing for inflation). The budget wouldalso expand the property subject to the new basis reportingconsistency requirement under Sec. 1014(f) to include propertyeligible for the estate tax marital deduction and gifts required tobe reported on a federal gift tax return. Oil tax Presidentâsbudget proposes many tax changes Page 3 of 4http://www.journalofaccountancy.com/news/2016/feb/budget-proposes-many-tax-changes-201613856.html2/10/2016 The budget proposes a $10.25-per-barrel âfeeâ on oil. TheOffice of Management and Budget estimates that this provision wouldraise $319 billion over 10 years.

erinduck149

1. The primary tool used by supply-side economists to eliminate macroeconomic problems is

A. the discount rate.

B. corporate tax rates.

C. government spending.

D. open market operations.

E. the reserve requirement.

2. When the Federal Reserve System buys government securities on the open market,

A. the money supply will decrease.

B. excess reserves at commercial banks will decrease.

C. excess reserves at commercial banks will increase.

D. interest rates will increase

3. One of the advantages of automatic stabilizers over discretionary fiscal policy is that automatic stabilizers

A. has a greater multiplier effect than discretionary policy.

B. is not subject to the time lag problems of discretionary policy.

C. does not produce a deficit during recessions as a discretionary policy does.

D. makes the actual budget a better reflection of the condition of the economy than the full-employment budget.

4. "I have promised to do everything in my power to reduce the federal deficit. That means reducing federal expenditures and, if necessary, increasing taxes. Under present conditions of full employment and steady prices, we can afford to bear the burden of this debt (i.e., pay off the debt) now instead of passing it on to our children and grandchildren."

If the policies of the Senator quoted above were adopted, what effects would be expected while these policies were being implemented?

A. higher inflation

B. increases imports

C. higher rates of economic growth

D. increased unemployment and idle capacity

5. An inflationary gap can be reduced or completely closed by

A. decreasing taxes while leaving government spending on goods and services unchanged.

B. decreasing government spending on goods and services while leaving taxes unchanged.

C. increasing government spending on goods and services while leaving taxes unchanged.

D. increasing both government spending on goods and services and taxes by the same amount.

6. Compared to fiscal policy, an advantage of monetary policy is its

A. greater flexibility.

B. highly selective impact on segments of the economy.

C. ability to eliminate cost-push inflation.

D. need for approval by Congress.

E. need for approval by the President.

7. An increase in government spending on goods and services which causes a budget deficit to exist

A. is always inflationary.

B. is more inflationary than equal increases in private spending.

C. is usually not inflationary when the economy is operating at its full-employment level of output.

D. will not necessarily cause serious inflation as long as there are unemployed resources in the economy.

8. Some analysts believe the tax cuts enacted during the President H.W. Bush administration represented a supply-side economic policy rather than a Keynesian fiscal policy because

A. the tax cuts were accompanied by decreases in interest rates.

B. the tax cuts were accompanied by increases in government spending.

C. the tax cuts were primarily aimed at upper-income groups and businesses.

D. the tax cuts were primarily aimed at middle income and lower-income groups.

9. When the federal government is stabilizing the economy by increasing taxes, monetary authorities should

A. take actions to decrease interest rates.

B. increase the supply of money.

C. buy government securities in the open market.

D. follow an expansionary money policy.

E. follow a contractionary money policy.

10. Suppose a commercial bank has demand deposits (checking accounts) of $400,000, actual reserves of $170,000, and a reserve requirement of 20%. This single commercial bank can lend a maximum of ______ and the banking system can increase loans by a maximum of ______

A. $90,000 and $450,000.
B. $90,000 and $360,000.
C. $90,000 and $170,000.
D. $170,000 and $450,000.

E. both can lend an unlimited amount.

11. Which of the following would most likely result if the federal government increased its spending without changing tax revenues during a period of full employment?

A. inflation

B. a recession

C. lower interest rates

D. a larger net exports deficit

12. Fiscal policy that emphasizes cutting taxes as a means of improving incentives to work, and invest would be characterized in aggregate demand - aggregate supply framework primarily a shift

A. left in the aggregate demand curve.

B. left in the aggregate supply curve.

C. right in the aggregate supply curve.

D. no shift in either the aggregate demand curve or the aggregate supply curve.

13. Which of the following will result in the greatest increase in aggregate expenditures/demand?

A. A $100 decrease in personal income taxes

B. A $100 increase in personal income taxes

C. A $100 increase in government expenditures

D. A $100 increase in government expenditures which is accompanied by a $100 increase in personal income taxes

E. Both A and C will have the same effect on aggregate expenditures

14. You are given the following information about aggregate demand for an economy: (1)consumption = $600 billion; (2) investment = $50 billion; (3) government purchases = $100 billion; and (4) net export = $20 billion. If the full-employment level of GDP for this economy is $720 billion, then what combination of actions would be most consistent to achieve full employment and stable prices?

A. an increase in government spending and taxes

B. decrease government spending and taxes

C. decrease government spending and increase taxes

D. increase government spending and decrease taxes

15. Advocates of fiscal policy agree that discretionary fiscal policy will stabilize the business cycle most when the federal government

A. continuously incurs budget deficits.

B. continuously runs budget surpluses.

C. balances its budget every year.

D. incurs budget deficits during recessions and budget surpluses during demand-pull inflations.

E. incurs budget surpluses during recessions and budget deficits during demand-pull inflations.

16. Discretionary fiscal policy that increases the government budget deficit has the same effect on equilibrium as

A. an increase in personal saving.

B. an increase in business investment.

C. a decrease in government spending.

D. a decrease in personal consumption expenditures

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ADMS 3810 Lecture Notes - Lecture 6: Sales Taxes In Canada, Real Estate Transfer Tax

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