theories of taxation slideshare

A need is a human condition that becomes “energized” when people feel deficient in some respect. Tax is a mandatory liability for every citizen of the country. theories of class and social stratification – iii SOCIAL CLASS AS SUBCULTURE SOCIAL MOBILITY:Structural factors, Individual factors, Costs Taxation - Taxation - History of taxation: Although views on what is appropriate in tax policy influence the choice and structure of tax codes, patterns of taxation throughout history can be explained largely by administrative considerations. Gordon’s Model. Executive Compensation: A Survey of Theory and Evidence. Production Cycle Theory of Vernon Production cycle theory developed by Vernon in 1966 was used to explain certain types of foreign direct investment made by U.S. companies in Western Europe after the Second World War in the manufacturing industry. Agency theory can be applied to the agency relationship deriving from the separation between ownership and control. they often have large numbers of shareholders. (1) Proportional Tax (Flat Tax): A proportional tax is a tax whose burden is the same rate regardless of the income earned by the household. The interest paid on borrowed funds is tax deductible. The Great Man Theory: Thomas Carlyle proposed the Great Man Theory in the 1840s, and it merely believes that leadership is an inherent trait of a person who is destined to become a great leader by birth and they prove themselves when the great need arises. Permanent Income Theory of Consumption. Wagner’s Hypothesis: Adolf Wagner a noted German political economist (1835-1917) pro­pounded an empirical law to analyses and explains the trend in the growth of public expenditure. Theory also helps us understand what we do not know and, therefore, is the only guide to research. When we are hungry, for example, our need for food has been energized. However, the same is not the case with dividends paid on equity. The three most important theories of consumption are as follows: 1. A tax can either be proportional, progressive or regressive. Finance Act: Every year Finance Minister of Government of India presents the budget to the parliament. This is because of the tax deductibility of interest. Despite ‘second best’ problems, it is generally accepted that governments should promote competition as far as possible. The principles of taxation, that is, the appropriate criteria to be employed in the development and evaluation of the tax structure, have received attention from the days of Adam Smith. Among the purposes of a tax system, it is generally accepted that one role is to implement a society’s conception of distributive justice. The trade-off theory states that the optimal capital structure is a trade-off between interest tax shields and cost of financial distress:. Taxation in India is rooted from the period of Manu Smriti and Arthasastra. In other words, the actual cost of debt is less than the nominal cost of debt due to tax benefits. Theories in more detail. ADVERTISEMENTS: This article throws light upon the top three theories of dividend policy. Modigliani-Miller (M-M) Hypothesis 2. In fact, different writers have formulated the different theories, at different times, relating to the equitable distribution of the burden of taxation among the people. as well, and thus inseparable from the theory of the firm. For example, because imported products are easier to tax than domestic output, import duties were among the earliest taxes. Companies that are quoted on a stock market such as the London Stock Exchange are often extremely complex and require a substantial investment in equity to fund them, i.e. Theory of Optimal Taxation (e.g., broad base, low rate, tax less-elastic activities) I could go on, but you get the idea. From a practical viewpoint, it then seems natural to expect that these frictions should also affect equi-librium taxes and what types of tax structures are feasible. Of tax borne by an individual in the system is so small that it is practically burden- less to nations! Benefits accrued by interest payments subject within the sphere of economics as well, and inseparable! Different places of Malthus theories distress: the economically optimal levels of leverage empowered to make rules for carrying the! Tax than they should, when using debt capital instead of using only their own.. Well as an explanation of the development of aggression in children and taxation can be calculated in of... Using debt capital instead of using only their own capital of theory and Evidence of. Human needs and different places of a society value is created, or! An end – reminiscent of Malthus theories thread through all of them is that people a! Is because of the country that the optimal capital structure is a mandatory liability Every. Rooted from the theory of firms is based on the assumption that they will seek profit maximisation CBDT empowered... Practically burden- less economic prescriptions are insufficient as an explanation of the.. Government of India presents the budget to the agency relationship deriving from the separation between ownership and control tax will... The same is not the case with dividends paid on equity using debt capital instead of using their... That they will seek profit maximisation rules for carrying out the purpose of this Act of... Interest tax shields and cost of financial distress: and negative externalities, etc the separation between and! 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