A Double Taxation Agreement (DTA) is an agreement between two countries aimed at preventing the same income from being taxed twice. These agreements offer various forms of double taxation relief to companies or individuals who are subject to tax in both countries.
An exemption is a deduction allowed to a taxpayer based on their status or circumstances, reducing the amount of income subject to taxation. Exemptions can apply in various contexts including personal income tax, homestead exemptions, and the alternative minimum tax.
A flat tax is a simple proportional tax system with a single rate. It has no reliefs or exemptions apart from a standard personal allowance, thereby streamlining tax compliance and administration.
Hidden tax, also known as stealth tax, refers to taxes that are not immediately apparent to taxpayers, creating an indirect financial impact.
An incentive in the USA that allows businesses to offset a portion of the cost of a depreciable asset against their income tax liability in the year of purchase, promoting investments in certain types of assets.
The Laffer Curve is an economic theory that illustrates the relationship between tax rates and tax revenue, suggesting that there is an optimal tax rate which maximizes revenue.
The marginal tax rate is the tax rate applied to an additional dollar of income, influenced by the progressive nature of income tax systems.
Changes in the tax laws designed to ensure that there is no net change in the total amount of revenue the government collects.
The concept of shifting and incidence of taxation refers to the determination of the economic entity that ultimately bears the tax burden. Certain taxes can be transferred to consumers through price adjustments, while others are absorbed by businesses.
A tax break refers to a reduction in tax liability that the government offers to stimulate or incentivize particular economic activities or behaviors.
Tax harmonization refers to the process of making tax systems more compatible across different jurisdictions, typically to minimize differences in tax bases and tax rates. This process aims to reduce tax competition and prevent tax evasion while fostering economic integration. However, it often faces resistance as it can limit the fiscal autonomy of individual governments.
Tax incidence refers to the analysis of the distribution of the tax burden between buyers and sellers. It assesses who ultimately bears the economic burden of a tax.
A wealth tax is an annual levy on the total value of personal assets, which may include stocks, bonds, real estate, and other types of property. This tax is designed to address wealth inequality by taxing individuals based on their net worth rather than their income.
