Financial Management Define Progressive Taxes Essay

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For a corporation, this increased their bottom line results and the total amounts of income they are generating. When this happens, investors are pleased with the direction of the firm and will reward the managers with lucrative pay packages and other benefits. ("Romney Forgoes Full Charity," 2012)

The reason why this is important is because corporations' can avoid having to pay the same taxes twice under the progressive system. The way that this occurs is the company can take a write off for operations they have overseas. This is because they can argue that the income was not generated within the United States. When this happens, they will be taxed at a lower rate for any kind of profits from these locations. ("Romney Forgoes Full Charity," 2012)

If a firm is generating a certain percentage of their earnings using this strategy, they can reduce their tax liabilities dramatically.

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This is from not having to pay the progressive taxes in U.S. And the country where they have established operations. When they are reporting their earnings, this will lead to an improvement in their costs and operating margins. ("Romney Forgoes Full Charity," 2012)

As a result, most corporations will view progressive taxes and the way they are imposed with certain amount of contempt. This is because the rates that they are paying will have an effect on the company's earnings, executive pay packages and if investors are satisfied with the direction of the firm. In those situations where shareholders are happy, is when the management can continue with their strategy. This is the point that the firm will become more dominate inside the marketplace and can quickly adjust to new transformations. ("Romney Forgoes Full Charity," 2012).....

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