Essay

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Chapter 19

Essay

This activity contains 3 questions.

Companies often consider the tax implications of their operations and seek ways to legally reduce the taxes they pay. This site provides information on a tax haven known as Campione D'Italia http://www.escapeartist.com/ditalia/ditalia.htm. What is special about this place? According to the article, what are the tax implications of locating a business there? What do you believe will happen to this city as a result of the EU?

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The U.S. currently uses a separate entity approach on the taxation of corporate income. One consequence of this approach is that corporate income paid as dividends is taxed twice, once as corporate earnings and once as earnings paid to stockholders. President Bush recently advocated the elimination of the double taxation of corporate dividends. The arguments for such a reduction are provided at this website http://www.house.gov/burton/RSC/DividendTaxationtp.pdf. What are the benefits of reducing or eliminating double taxation? How would such an act impact global competitiveness?

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As the number of U.S. taxpayers and corporations using offshore accounts to avoid paying income taxes has increased, the IRS has began targeting such activity to recoup lost tax revenue. This IRS site http://www.irs.gov/businesses/small/article/0,,id=106556,00.html discusses the nature of what the IRS terms "Abusive Offshore Tax Avoidance Schemes" and how the IRS plans on targeting these activities. Under what circumstances are these types of activities legitimate? What types of abusive promotions are being offered? How do secrecy and conservativism contribute to this problem?

To create paragraphs in your essay response, type at the beginning of the paragraph, and at the end.

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