Read the text and complete it with the following words.
tax fraud exceeds(v) tax brackets income tax burden increases(v) comply with flat rate
Taxation Methods
There are two main methods of income taxation – __________ (1) taxationand progressive rate taxation.
In a flat rate taxation system, the same tax rate is applied to every taxpayer, regardless of their _________ (2). In practice, that means applying a single tax rate to the income which is above an exempt amount. This also means that there are no deductions or exemptions allowed. Supporters of this tax policy argue that it is easy to understand and _________ (3), and reduces the possibility of error and ________ (4). In addition, it encourages investment, since additional profit is not taxed at a higher rate.
In a progressive rate taxation system, the tax rate ________ (5) as the income increases. Individuals with lower income levels are taxed at a lower rate than those with higher income levels. There are different rates at which an individual is taxed, or different __________ (6)(UK: tax bands). Tax brackets are the divisions at which tax rates change in a progressive taxation system – when a taxpayer’s income _________ (7) a certain point, it will be taxed at a higher rate. Proponents of the progressive tax system argue that it is both fair and socially justifiable, as it justly distributes the _________ 8) between the rich and poor.
Countries with the progressive taxation system include the USA, the UK, France and Germany, while the flat rate taxation system has been adopted in several east-central European states.
Exercise 5. Match the words below to their definitions
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1.Personal Income Tax | A.a type of a tax that is imposed on those who inherit assets from a deceased person |
2.Corporation Tax | B.payment made to a professional or public body in exchange for services |
3.Capital Gains Tax | C.a tax that must be paid by a corporation based on the amount of profit generated |
4.Inheritance Tax | D.a tax levied in addition to the primary tax rate |
5.Value Added Tax | E.an indirect tax charged on the sale of specific goods, such as petrol, tobacco products or alcohol |
6.Sales Tax | F.a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale |
7.Excise Duty | G.a tax levied on capital gains incurred by individuals and corporations. |
8.Tariff | H.a tax imposed by the government at the point of sale on retail goods and services |
9.Fee | I.a tax paid on one’s personal income |
10.Surcharge | J.a tax imposed on imported goods and services, used to restrict trade |
SPEAKING FOCUS
1. What is the most important form of indirect tax in your country?
2. Are there any special or local taxes in your country?
3. Are you in favour of a low or high corporate income tax rate? Explain why?
4. Choose one of the two opinions presented below and prepare arguments in its favour:
a) higher income taxes create conditions for greater pro-social spending; b) lower income taxes create better conditions for entrepreneurs.
VOCABULARY FOCUS
ad valorem tax налог на стоимостной основе
(адвалорный налог)
amount to (v) равняться, быть эквивалентом
annually ежегодно
average средний
basic essentials предметы первой необходимости
capital gains tax налог на прирост капитала
commodity товар потребления, продукт
counter argument встречный аргумент
curb (v) обуздать, сдерживать
decrease (v) понижать
direct tax прямой налог
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disproportionately непропорционально, несоразмерно
entity экономический субъект
exceed (v) превышать, превосходить
excise tax акциз
expenditures издержки, расходы
flat rate taxation единая налоговая ставка
fee плата за услуги
fine взыскание (штраф)
fund (v) финансировать
fraction дробь, доля, часть
fixed rate фиксированная процентная ставка
flat cost себестоимость
foster (v) укреплять, стимулировать
gasoline taxes налог на бензин
hardship трудность, тяготы, лишение
hinge on (v) зависеть от
household домашнее хозяйство
income redistribution перераспределение дохода
indirect tax косвенный налог
impose (v) облагать налогом
increase (v) увеличивать
marginal tax rate предельная ставка налога
merits and drawbacks достоинства и недостатки
parking fees плата за стоянку
payroll tax налог с заработной платы
penalize (v) наказывать, штрафовать
personal income tax налог на доходы физических лиц
progressive taxation налогообложение по прогрессивным ставкам
public goods общественные блага
public revenue государственные доходы
retiree пенсионер, вышедший на пенсию
sin taxes налог на «пороки» (алкоголь, табак,
азартные игры)
social security tax налог на социальное страхование
social welfare социальное обеспечение
shift (v) перекладывать, сдвигать
subject to (v) подвергать
surcharge дополнительно взимаемая сумма
(например, пеня за просрочку налогового платежа)
stratification of society расслоение общества
tax bracket налоговая категория;
разряд налогообложения
tax burden налоговое бремя
tax rate ставка налога
tax incidence налоговая нагрузка
tolls on roads пошлины на дорогах
tax unit объект налогообложения
value added tax налог на добавленную стоимость
PART 3
TOPIC FOCUS: How Will Your Tax Bracket Change?