Major Individual and Business Tax Components

Subject: Finance
Pages: 2
Words: 277
Reading time:
< 1 min

All the three-taxation system recognize the need to have an effective taxation system, but their point of contention is on how to achieve this goal. The current system of taxation taxes individuals according to their level of income. It has a graduated taxation system that ensures that those earning higher salaries pay high taxes to the government. This is the same scenario that the 2011 budget provision had but went further to increase the tax burden of the high earning members of the society.

The current tax bracket is 10%, 15%, 25%, or 28%, 33% and 36%, under the 2011 budget provision then it will be 15%, 25%, 28%, 36% and 39.6%. Under the roadmap then the proposal suggests that the tax rates for individuals should be simplified in a way that one does not have to use all the above rates to calculate his tax. It says that people should decide on how much to pay, and elimination of minimum tax (AMT) was necessary. The method simplifies the tax rate into two (i.e., 10 per cent for the initial adjusted gross income up to $100,000 for joint filers, 10 per cent of adjusted gross income up to $50,000 for single filers). Any amount that goes beyond that should be taxed at 25%.

In business taxation in the current case, the amount is 39% corporation tax. According to road map, the amount should be scaled down to 25% with the exemption of taxing savings. In 2011 budget provision recognizes 100% of bonus depreciation deduction that was previously deductible up to 50% of the basis of the property.