Research Paper
Executive summary
This paper examines the concept of tax avoidance and evasion. The two terms have different meanings and they all contribute to the decrease in government revenue. The government raises most of its income through taxation. However, defaulters greatly contribute to a substantial decrease in the overall government income. There are very many ways in which people carry out taxation malpractices. Some of them have established a loophole in the legal system that gives them a chance to evade taxes without facing the risk of being prosecuted. This has greatly encouraged the act. On the other hand, government taxation officials and agencies also contribute towards tax avoidance and evasion. Officials encourage tax avoidance by taking bribes and letting some people and business walk without paying their taxes. On the other hand, there have been complaints about the PSI contributing to tax evasion and avoidance. Over the years the government has worked tirelessly towards ensuring that incidents of tax evasion and avoidance are greatly reduced if not eliminated. Introduction of the Alternative Minimum Tax is aimed at making sure that nobody avoids taxation completely. The United States Tax Disclosure Regulations are aimed at enhancing transparency and increasing promptness when it comes to dealing with tax defaulters. However, according to the study there is still more that needs to be done to deal with tax avoidance and evasion.
Introduction
The two terms are often interchangeably used but according to accounting the two terms refer to two different things. In accounting, tax evasion refers to the illegal schemes derived in order to hide some taxes from being taxed. On the other hand tax avoidance is the legal skill of using the current system of taxing to pay minimum tax for ones assets. Avoidance Involves tactical interpretation of the law for economic gain. U.S is among the developed nations with the highest numbers of tax defaulters, this
This paper examines the concept of tax avoidance and evasion. The two terms have different meanings and they all contribute to the decrease in government revenue. The government raises most of its income through taxation. However, defaulters greatly contribute to a substantial decrease in the overall government income. There are very many ways in which people carry out taxation malpractices. Some of them have established a loophole in the legal system that gives them a chance to evade taxes without facing the risk of being prosecuted. This has greatly encouraged the act. On the other hand, government taxation officials and agencies also contribute towards tax avoidance and evasion. Officials encourage tax avoidance by taking bribes and letting some people and business walk without paying their taxes. On the other hand, there have been complaints about the PSI contributing to tax evasion and avoidance. Over the years the government has worked tirelessly towards ensuring that incidents of tax evasion and avoidance are greatly reduced if not eliminated. Introduction of the Alternative Minimum Tax is aimed at making sure that nobody avoids taxation completely. The United States Tax Disclosure Regulations are aimed at enhancing transparency and increasing promptness when it comes to dealing with tax defaulters. However, according to the study there is still more that needs to be done to deal with tax avoidance and evasion.
Introduction
The two terms are often interchangeably used but according to accounting the two terms refer to two different things. In accounting, tax evasion refers to the illegal schemes derived in order to hide some taxes from being taxed. On the other hand tax avoidance is the legal skill of using the current system of taxing to pay minimum tax for ones assets. Avoidance Involves tactical interpretation of the law for economic gain. U.S is among the developed nations with the highest numbers of tax defaulters, this
References: Carl, D. "Who Pays? A Distributional Analysis of the Tax Systems in All 50 States", Institute on Taxation & Economic Policy, Third Edition, November 2009. Print Dyreng, H. & Maydew, E. Long-run corporate tax avoidance. The Accounting Review. 2008. Print Leiserson, G. "The Individual Alternative Minimum Tax: Historical Data and Projections". Brookings Institution & Urban Institute. 2008. Print Slemrod, J. "Cheating Ourselves: The Economics of Tax Evasion." Journal of Economic Perspectives, 21(1): 25–48. 2007. Print Turbotax. Web. April 19, 2013. < http://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/Alternative-Minimum-Tax--Common-Questions/INF12072.html>. Topic 556 - Alternative Minimum Tax. February 05, 2013. Web. April 19, 2013. .