The Impact Of Corporation Tax Liabilities Of Individual Companies And Groups Of Companies

These cuts will result in a decrease of government expenditure and an increase in household tax. Firms will suffer, with little support from the government sector, reducing the circular flow of income. Household savings will increase, as they will be paying more in tax. Firms will then be impacted because consumers will be spending

However, there are also some drawbacks associated with raising taxes. Tax is a form of leakage from the circular flow of income leading to negative multiplier effect. If the government increases income tax rates, it might create disincentives to work. It is because when income tax increases, the opportunity cost for leisure time decreases; and people will have to work longer

Corporation tax is a tax on company profits which means it directly affects TESCO. A cut in tax means Tesco will have more disposable profits which they could use in many ways. They could add to their reserves saving it for an emergency, or use the profits to finance investment, which will directly increase economic growth. Another use is reduce corporate debt, which will increase Tesco’s future profits. They could also give their shareholders bigger dividends, which could lead to bigger investments if shareholders invest their extra income back into Tesco.

However, these long and short term economic improvements are only what is predicted to happen and there negatives to the reduction in income tax. A factor that the government must take into account is the budget deficit, can the government afford to simply cut income tax that is a large source of revenue for the budget. A worsened budget deficit could have devastating impacts upon the economy, for example less people able to have the benefits they require, (this would also reduce demand in the economy as those on benefits generally spend the money they have as they do not have spare to save, this may damage the economy even further) or a reduction in money towards health care. Also, a reduction in income tax does not necessarily mean

Whilst William McBride, chief economist for Tax Foundation website, sided with tax cut policy saying that to strengthen the financial state, “we should lower taxes on the earnings of capital,” “workers and the businesses that hire them,” Chye-ching Huang and Nathaniel Frentz, both are senior Tax Policy analysts, completely debunked the evidence McBride provided to support his argument, which includes the review of twenty-three among twenty-six studies he thought to advocate the idea. Indeed, as one conducts research, regardless of what sources it comes from, agreement over tax issue should never be found as a unanimous answer. One of the reasons why it is so difficult to reach a definite conclusion rests on the fact that although some statistics may show economic growth was in step with tax cut, correlation does not mean causation: just as ice-cream sale and murder rate increase during summer time, it is baseless to assume that higher ice-cream consumption leads to higher odds for crime. Moreover, because there is a great amount of research has been done on taxes, different interpretations from these data are understandable. Before concluding that “nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal” finds cutting taxes improves the financial status quo, thus, people need to consider

Corporation tax increase would affect Tesco has their profits are low compared to previous years and wouldn’t be able to do investments or campaigns to try to increase sales. This would allow their competitors do keep doing successful campaigns and investments, which will steal customers causing Tesco to go into a negative multiplier effect. But, Tesco’s competitor’s profits would also decrease causing them to do less investment and provide less money to their campaigns. This would allow Tesco to try to do a more successful campaign than their competitors to steal customers, increase sales and profits to get back to their 33% market share.

But on the hand sometimes a government can introduce laws that can be favourable to the business environment for example low taxes for foreign investors, like apple, Google, Amazon and Starbucks all these are big companies that pay less tax here in the UK.

The government relies on collecting taxes in order to create revenue and function successfully. A decrease in taxes affects business and the government differently. A decrease in taxes is good for business and bad for the government. Many entitites rely on government funds in order to operate and function

rate, in periods of higher income tax the GDP sees an increase thus proving that higher taxes do not create a drag in the economy. When the top marginal tax rate is at a 75 to 80 there is an about 4.6 GDP growth creating this “Sweet-spot”.

If the taxes for business are lowered, the businesses will be able to increase employment, and that will lead to the unemployment rate further decreasing, which will improve economic growth. In addition to that, the businesses will spend more on supplies and as it spends more on supplies, other businesses will get higher demand, and that will lead to more money that can be spent on multiple things such as hiring people, and improving production, and management efficiency. Eventually, this will be a ripple effect, and the Canadian economy will

of realizing no benefit. The sustainability of this tax position does not affect the tax bases of the

Choosing a Corporation/Company Structure - the business structure of a company/ corporation is highly recommended, it has the flexibility to gain more capital, or credit capability and assets used as security. Based on the Corporation Act 2001 (Cth) AC 22, a corporation is another legal entity with their own legal rights, duties and responsibilities separate to the individual or owner of the company (Harris, Hargovan & Adams, 2013, pp 229). The risk and consequences are one of the principal considerations of choosing a company structure (Harris, Hargovan & Adams, pp 50). Based on the “Corporate Veil” Liability is owned by a separate legal entity and not to the extent of the owner, for instance, the debt of the company is not a personal liability, but the company. This is further explained in the case below.

Lower rates of corporation tax and other business taxes can stimulate an increase in business fixed capital

The United States is in a recession; it has been facing some of the worse economic times since the Great Depression in the 1930’s. One option to fix the economy is to change the corporate tax rate. To lower it or to raise it, that is the question economists have been speculating. America's high corporate tax rate and worldwide system of taxation discourages U.S. companies from sending their foreign-source revenue home, which makes U.S. companies defenseless to foreign acquisition from the international opponents (Camp). Corporations and United States citizens have been fighting for a tax reform, which would hopefully help the American economy; either by lowering the corporate tax, or by raising the tax.

Then, their business profit needs to be share to government and they only get 67.8 percent of profit. For example, if a business earns 10000 Nigerian naire then 3220 Nigerian naire need to give government for the tax. They only get 6780 nigerian naire and it will limit the expand of business as yearly profit frequently be the main resource of capital to grow the firm. So the high tax rate will make the entrepreneur have less money to increase the capital in business. (Mitchell, and Fellow 1993,6 )