The legal framework should be clear without any hidden taxes or unreasonable growth. Regime should be equally convenient both for business and for individuals. In addition, the amount of the tax should be minimized, particularly to support small business and entrepreneurship for which the burden is heaviest. Taxation may be an element of behavior management.
There are five main principles of taxation by Adam Smith:
Simplicity and stability of taxation;
Minimizing / Evasion;
Efficiency;
Tax Competitiveness;
Taxes change behavior (Econlib.org, 2016).
The globalization of business means countries need to ensure competitive tax rates and more friendly to regulation with respect to the payer. The risk of competition is understated rates that allow offshore tax (offshore tax), or systems with a fixed tax rate, which can lead to dragging investments between countries and undermine the existing international financial and legal initiatives. Association of Chartered Certified Accountants (ACCA) committed to self-determination of nations in resolving their own tax climate in terms of global competition, but the country should be aware of the probability of return action and trade wars caused by excessive decline in business taxation (ACCA, 2016).
American experts recognize that and so quite complex US tax system becomes even more complicated because of the difficult fiscal relations between federal and local authorities. Despite the problems, the governments of various levels to successfully interact in the exchange of information on tax (ACCA, 2016). In particular, estimates state and local taxes are based on the federal tax return.
The federal government exercises executive functions, implement the national policy that provides for the administration of federal finance (tax collection, budget spending, debt management); federal agencies, federal property management and implementation of programs of financial support for state and local governments are major advantages of American tax system.
References
ACCA,. (2016). Taxation of individuals – advanced aspects | P6 Advanced Taxation | ACCA Qualification | Students | ACCA Global. Accaglobal.com. Retrieved 9 July 2016, from http://www.accaglobal.com/ubcs/en/student/exam-support-resources/professional-exams-study-resources/p6/technical-articles/taxation-individuals.html
Econlib.org,. (2016). Bastable: Public Finance, Book III, Chapter VII | Library of Economics and Liberty. Econlib.org. Retrieved 9 July 2016, from http://www.econlib.org/library/Bastable/bastbPF20.html
