Business Administration & Management Mr. Bernstein Notes, pp Business Taxes April 10, 2014

Business Administration & Management Mr. Bernstein Reasons for Taxes Raise revenues to fund government programs Regulate and influence business activity Fiscal policy – affect economic growth rates “Sin taxes” (ie alcohol, tobacco) Tax rate reductions to encourage desirable ventures (ie, energy policy) Influential special interests and donations to politicians 2

Business Administration & Management Mr. Bernstein Fairness and Taxation – what is a “Fair Share”? Flat Tax - one rate, regardless of income level No tax breaks for charity, home mortgage, etc. Progressive Tax – rates are higher for higher earners Regressive Tax – rates are higher for lower earners 3

Business Administration & Management Mr. Bernstein Types of Taxes Income Tax Sales Tax Property Tax Corporate Tax Payroll Tax Capital Gains Tax Estate Tax Registration & Licensing Fees 4

Business Administration & Management Mr. Bernstein Businesses analysis must use After-Tax projections Examples of how decisions change due to tax code Tax uncertainty delays business activity (“The Fiscal Cliff”) 5