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A tax inversion or corporate tax inversion is a form of tax avoidance where a corporation restructures so that the current parent is replaced by a foreign parent, and the original parent company becomes a subsidiary of the foreign parent, thus moving its tax residence to the foreign country. Executives and operational headquarters can stay in ...
where Y represents national income or GDP, C is consumption, I is investment, G is government spending and X–M stands for net exports. This represents GDP because all the production in an economy (the left hand side of the equation) is used as consumption ( C ), investment ( I ), government spending ( G ), and goods that are exported in ...
The corporate tax rate as well as the tax amortization period are defined by country-specific tax legislations. The tax amortization period might be different from the useful life used in accounting. For example, while trademarks can have an indefinite useful life for accounting purposes, the tax legislation of the United States establishes a ...
(Y − T + TR) is disposable income whereas (Y − T + TR − C) is private saving. Public saving, also known as the budget surplus, is the term (T − G − TR), which is government revenue through taxes, minus government expenditures on goods and services, minus transfers. Thus we have that private plus public saving equals investment.
Taxable income refers to the base upon which an income tax system imposes tax. [1] In other words, the income over which the government imposed tax. Generally, it includes some or all items of income and is reduced by expenses and other deductions. [2] The amounts included as income, expenses, and other deductions vary by country or system.
The income tax rate itself is proportional, with people with higher incomes paying more tax but at the same rate. If a consumption tax is to be related to income, the unspent income can be treated as tax-deferred (spending savings at a later point in time), at which time it is taxed creating a proportional rate using an income base.