Reference no: EM131468675

1. There have been many articles in the last decade about large corporations and the golden parachute packages given to the executives. Discuss one example of a publicized golden parachute package in the last decade. What are the advantages and disadvantages to the corporation when offering a golden parachute package?

JA 2. Every government wants to increase its tax bracket. Increasing the tax brackets means more revenues and more money for spending on infrastructure and other forms of expenditures. When a consumption tax is applied, it taxes goods or services when they are consumed and they do not touch a person's savings. Income tax however is taxed on the money someone is paid and also taxes savings because revenues are also raised from savings in terms of interest and dividends and capital gains. Consumption tax has been dubbed as superior because it comes closest to the attainment of temporal neutrality. A tax is said to offer temporal neutrality if it does not affect the way people spend their money or their behavior patterns. A consumption tax is based on consumption, the goods and services that are being conserved. The goods and services being consumes are not relevant to the tax bracket, it is levied on all manner of consumption. An income tax on the other hand forms a barrier between that they earn and what they actually get to spend. This is a negative force on the economy because those who will earn less will go for activities that they will spend less on. A well-designed consumption tax is more neutral and does not affect how resources are distributed but it will not raise enough revenues. For raising revenues, the income tax is more efficient (Auerbach, 2005)

References

Auerbach Alan J. (2005) "A Consumption Tax" The Wall Street Journal