tax shelter

Examples of tax shelter in the following topics:

• Fringe Benefits

  • Some fringe benefits (for example, accident and health plans, and group-term life insurance coverage up to US $50,000) may be excluded from the employee's gross income and are therefore not subject to federal income tax in the United States.
  • Some function as tax shelters (for example, flexible spending accounts, 401(k),and 403 (b)).

• Corporate Taxes

  • They are one in the same for tax purposes.
  • There is no method for sheltering tax in a sole proprietorship.
  • This income is taxed at a specified corporate tax rate.
  • Some systems have graduated tax rates - corporations with lower levels of income pay a lower rate of tax - or impose tax at different rates for different types of corporations.
  • Corporations are also subject to property tax, payroll tax, withholding tax, excise tax, customs duties and value added tax.

• Disposable Income

  • Income left after paying taxes is referred to as disposable income.
  • Disposable income is thus total personal income minus personal current taxes .
  • Amounts required to be deducted by law include federal, state, and local taxes, state unemployment and disability taxes, social security taxes, and other garnishments or levies, but does not include such deductions as voluntary retirement contributions and transportation deductions.
  • In other words, it is the amount of an individual's income available for spending after the essentials (such as food, clothing, and shelter) have been taken care of.
  • It is whatever income is left after taxes.

• Fiscal Policy -- Budget and Taxes

  • (Local governments, in contrast, generally collect most of their tax revenues from property taxes.
  • The 1862 tax law also established the Office of the Commissioner of Internal Revenue to collect taxes and enforce tax laws either by seizing the property and income of non-payers or through prosecution.
  • Similarly, the government allows lower- and middle-income taxpayers to shelter from taxation certain amounts of money that they save in special Individual Retirement Accounts (IRAs) to meet their retirement expenses and to pay for their children's college education.
  • The Tax Reform Act of 1986, perhaps the most substantial reform of the U.S. tax system since the beginning of the income tax, reduced income tax rates while cutting back many popular income tax deductions (the home mortgage deduction and IRA deductions were preserved, however).
  • The Tax Reform Act replaced the previous law's 15 tax brackets, which had a top tax rate of 50 percent, with a system that had only two tax brackets -- 15 percent and 28 percent.

• The State of Global Business

  • They are also increasingly coming to use the internet to conduct many more basic business processes such as filing taxes and regulatory compliance forms, locating and initiating key business connections, coordinating work teams, and telecommuting.
  • This has placed every key material resource – energy, food, water, shelter, and the regenerative ecosystem itself – under rapidly increasing supply pressure.

• The Poor, the Homeless, and the Victims of AIDS

  • Many existing shelters and soup kitchens had to expand their facilities to accommodate the larger number of homeless people.
  • The McKinney Act originally had fifteen programs providing a spectrum of services to homeless people, including the Continuum of Care Programs: the Supportive Housing Program, the Shelter Plus Care Program, and the Single Room Occupancy Program, as well as the Emergency Shelter Grant Program.
  • Political opponents chided his "Trickle-down economics" policies due to the significant cuts in taxes for the wealthiest Americans; supporters pointed to the drop in poverty after his policies took effect to validate that the tax cuts did indeed trickle down to the poor.

• Corporate and Payroll Taxes

  • Many countries impose a corporate tax, also called corporation tax or company tax, on the income or capital of some types of legal entities.
  • The taxes may also be referred to as income tax or capital tax.
  • The effective tax rate is the average corporate tax rate on the company's income and this takes into consideration tax benefits included in a current tax year.
  • Corporations are also subject to a variety of other taxes including: property tax, payroll tax, excise tax, customs tax and value-added tax along with other common taxes, generally in the same manner as other taxpayers.
  • Deductions from an employee's wages are taxes that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG).

• Comparing Marginal and Average Tax Rates

  • An average tax rate is the ratio of the total amount of taxes paid, T, to the total tax base, P, (taxable income or spending), expressed as a percentage.
  • Broadly, the marginal tax rate equals the change in taxes, divided by the change in tax base, expressed as a percentage.
  • A progressive tax is a tax in which the tax rate increases as the taxable base amount increases .
  • A regressive tax is a tax imposed in such a manner that the average tax rate decreases as the amount subject to taxation increases .
  • A proportional tax is a tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.

• Corporations

  • Because a corporation has legal standing itself, its owners are partially sheltered from responsibility for its actions.
  • As distinct legal entities, corporations must pay taxes.
  • The dividends they pay to shareholders, unlike interest on bonds, are not tax-deductible business expenses.
  • And when a corporation distributes these dividends, the stockholders are taxed on the dividends.
  • (Since the corporation already has paid taxes on its earnings, critics say that taxing dividend payments to shareholders amounts to "double taxation" of corporate profits. )

• Tax Rate

  • The tax rate is the amount of tax expressed as a percentage.
  • In a tax system, the tax rate describes the ratio at which a business or person is taxed .
  • An average tax rate is the ratio of the amount of taxes paid to the tax base (taxable income or spending).
  • To calculate the average tax rate on an income tax, divide the total tax liability by the taxable income.
  • A marginal tax rate is the tax rate that applies to the last dollar of the tax base (taxable income or spending) and is often applied to the change in one's tax obligation as income rises.