Demerits of direct taxes, Managerial Economics

Assignment Help:

Demerits of direct taxes

a. Heavy direct taxation, especially when closely linked to current earnings, can act as a serious check to productivity by encouraging absenteeism and making men disinclined to work.

b. Heavy direct taxation will clearly reduce people's ability to save since it leaves them with less money to spend.  Taxation may, therefore, act as a deterrent to saving.  Heavy taxation of profits makes it more difficult for business to build up reserves to cover replacement of obsolete or worn-out capital and thus investment.

c. Direct taxes possess an element of arbitrariness in them.  They leave much to the discretion of the taxation authorities in fixing the rates and in interpreting them.

d. They are not imposed on all as incomes earned on subsistence and non legal activities are left out.

e. Cost of collection is generally high.

f. These taxes are easily evaded either by understating the source of income or by any other means.  Such taxes thus cultivate dishonesty and there is loss of revenue to the state.


Related Discussions:- Demerits of direct taxes

Product differentiation, PRODUCT DIFFERENTIATION   Product differenti...

PRODUCT DIFFERENTIATION   Product differentiation describes a situation in which there is a single product being manufactured by several suppliers, and the product of each su

Gross domestic product, Gross Domestic Product A measure of national ec...

Gross Domestic Product A measure of national economic activity, GDP is measured from two approaches. GDP can be viewed as the total value of all goods and services produced in

Elasticity of demand, a. Explain why the demand for a particular brand is m...

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast

Demand and supply, The demand for good X is estimated to be:  where p x p...

The demand for good X is estimated to be:  where p x price of X in dollars M = personal disposable income in trillions of dollars per year P y = price of a competitive in do

Normal and supernormal profits, NORMAL AND SUPERNORMAL PROFITS Normal ...

NORMAL AND SUPERNORMAL PROFITS Normal profit refers to the payment necessary to keep an entrepreneur in a particular line of production. In economics, it is generally belie

Economies and diseconomies of scale, Economies and diseconomies of scale ar...

Economies and diseconomies of scale are of two types- external andinternal. Internal economies and diseconomies are those which a firm reaps as a result of its own expansion. Conve

Calculate the optimal lifetime incomes and firms, Dan and Ann are chemical ...

Dan and Ann are chemical engineers working for a biotech company. Each of them would like to be promoted to a managerial position, but only one of them can get the job. Their super

Nature of demand curves and elasticity, Usually, elasticity of a demand cur...

Usually, elasticity of a demand curve throughout its length isn't the same (Fig. below). It varies between 0 and ∞, or in other words, 0 ≤ e p ≥ ∞ In some cases, though, the

Describe about regression analysis, Describe about regression analysis ...

Describe about regression analysis An illustration from the automobile industry is befitting for explaining the forecasting method that uses simple regression analysis. Let's p

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd