) от риска
rate of return – норма прибыли
added risk of default – добавленный риск дефолта ( неисполнения обязательств )
diversified portfolio – диверсифицированный инвестиционный портфель
missing element – отсутствующий, недостающий элементExercise 9
Answer the questions:
1. Who are junk bonds issued by?
2. In what way are junk bonds rated?
3. What is bond rating?
4. What is the riskiness of bonds?
5. How much interest do companies pay on junk bonds, if compared to the investment– grade bonds?
6. Why are junk bonds so attractive to debtors and investors?
7. Why do some investors prefer to hold a diversified portfolio of junk bonds?
8. How do junk bonds work in times of economic changes?6. Налоги, налоги, налоги… (Taxes… taxes… taxes…)
Fiscal Policy
Fiscal policy is the use of the government budget to affect an economy. The government is engaging in fiscal policy when it decides on taxes, the transfer payments, or the goods and services that it purchases. The economic impact of changes in the government budget tells on interested groups – a tax cut for businesses, for example, raises their disposable income and allows them to reinvest and develop.
To define the fiscal policy one has to look at the difference between the government spendings and revenues, that is, the government deficit. Fiscal policy is tight or contractionary when revenue is higher than spending (the government budget is in surplus) and loose or expansionary when spending is higher than revenue (the budget is in deficit).
The fiscal policy changes the aggregate demand for goods and services. A fiscal expansion raises it in two ways. If the government increases purchases but keeps taxes the same, it increases demand directly. Second, if the government cuts taxes or increases transfer payments, people\'s disposable income rises, and they will spend more on consumption. This rise in consumption will, in turn, raise aggregate demand.
Fiscal policy also changes the structure of aggregate demand. When the budget is in deficit, the government can issue bonds, thus competing with private borrowers for money lent by savers (say, general public). The interest rates rise affecting private investment (reducing its output). In this case fiscal policy can also influence the exchange rate and the trade balance of the country. The rise in interest rates attracts foreign capital, causing an exchange rate appreciation. This, in turn, makes imported goods cheaper, exports more expensive abroad, which causes a decline of the trade balance. And, the other way round, the fall in the interest rates caused by fiscal policies, raises the trade balance of the country.
To the general public fiscal policies are more often associated only with taxes.
Слова и выражения:
contractionary – сжимающий(ся), сокращающий(ся)
decline – падение, снижение
define – определять, давать определение
loose – свободный, несдерживаемый
reinvest – реинвестировать
revenue – приход (средств)
tight – плотный, сжатый, крепкий
engage in – участвовать (в)
transfer payments – выплата трансфертов
tell on – сказываться на
disposable income – имеющийся в наличии доход
general public – широкая публикаExercise 1
Answer the questions:
1. When does the government engage in fiscal policy?
2. How does a tax cut tell on tax payers?
3. When do we call fiscal policy tight?
4. When do we call fiscal policy loose?
5. How can a government increase demand directly by using fiscal instruments?
6. What is the relation between consumption and output?
7. What happens to the structure of aggregate demand in case the government issues bonds?
8. How is the exchange rate affected by the governmental bonds emission?
9. What happens to the trade balance if the government issues bonds.
10. What aspect of fiscal policies is the general public mostly concerned with?Tax Collectors… We Love Them All So Much!
1
A fine is a tax for doing something wrong.
A tax is a fine for doing something right.
2
If an economist and an tax inspector agent were both drowning and you could only save one of them, would you go to lunch or read the paper?
Corporate Taxation
The corporate income tax is the major method by which governments in many countries collect money. This tax is popular with the general public, who thinks, incorrectly, that the corporate income tax is paid by corporations. On the other hand, corporations often believe, just as incorrectly, that this tax is simply passed along to consumers. This is why the corporate income tax is so popular among politicians.
The corporate income tax differs from the individual income tax in two major ways. First, it is a tax not on gross income, but on net income or profits, with deductions for most costs of doing business. Second, in the USA, for example, it applies only to some businesses – those chartered as corporations – and not to partnerships or sole proprietorships.
In the USA the federal tax is levied at three different rates on different brackets of income: 15 percent on taxable income under $50,000; 25 percent on income between $50,000 and $75,000; and 34 percent on income above that. The lower-bracket rates are beneficial to small corporations. Of the 3.2 million corporate tax returns filed in one recent year, more than 90 percent were from corporations with assets of less than $1 million.
The lower rates, however, had little economic significance. Nearly 94 percent of all corporate tax revenue came from the 8.8 percent of corporations with assets greater than $1 million. States levy further income taxes on corporations, at rates ranging from 3 percent to 11.5 percent. Because states typically permit deductions for federal taxes paid, net rates range from 1.9 percent to 4.9 percent. Some local authorities tax corporations as well. A good reason that state and local corporate income taxes remain low is that corporations could easily relocate out of states that imposed unusually high taxes.
Слова и выражения:
assets – активы
beneficial – выгодный, благоприятный
charter – регистриро – вать(ся)
deduction – скидка, льгота
file – заполнять, подавать документы, сведения
impose – налагать, облагать
incorrectly – неправильно, неверно
levy – облагать (налогами)
partnership – товарищество, партнерство
relocate – менять местоположение, передислоцироваться
taxable – подлежащий налогообложению
corporate income tax – налог на прибыль с корпорации
general public – широкая публика
pass along to – передавать, переадресовывать
gross income – совокупный доход ( до налогообложения )
net income – чистая прибыль ( после налогообложения )
sole proprietorship – индивидуальное частное предприятие
bracket of income – категория доходности
tax return – налоговые поступления
range from… to… – находиться в пределах от… до…
Exercise 2
Answer the questions:
1. Why is the corporate income tax so popular with the general public?
2. Why is it popular with corporations?
3. Why do politicians love the corporate income tax?
4. What is the difference between the corporate income tax and the individual income tax?
5. What businesses does the corporate income tax apply to in the USA?
6. What tax is levied on American corporations with taxable income under $50,000?
7. What businesses pay the most of the aggregate corporate income tax?
8. What authorities besides the federal government can tax corporations?
1The difference between the short and long income tax forms is simple. If you use the short form, the government gets your money. If you use the long form, the tax advisor gets your money.
2– What is the difference between tax avoidance and tax evasion? – The jail walls.
3– Why won\'t sharks attack tax inspectors? – Professional courtesy.
4– How do you know you\'ve met a good tax accountant?
– He has a loophole named after him.
Слова и выражения:avoid – избегать
courtesy – вежливость, учтивость
evade – избегать, уклоняться
jail – тюремная камера
loophole – «лазейка» ( здесь : в законе)
shark – акула
name after – называть (в честь кого-либо )
tax advisor – налоговый консультант
tax avoidance – законный уход от уплаты налогов посредством использования лазеек в законодательстве и различных налоговых льгот
tax evasion – незаконное уклонение от уплаты налоговProgressive Taxes
Taxes are the price people pay for civilized society. The progressivity of taxes largely determines how that price varies among individuals. A progressive tax structure is one in which an individual or family\'s tax liability as a fraction of income rises with income. If, for example, taxes for a family with an income of $20,000 are 20 percent of income and taxes for a family with an income of $200,000 are 30 percent of income, then the tax structure over that range of incomes is progressive. One tax structure is more progressive than another if its average tax rate rises more rapidly with income.
Judged by the top income tax rates alone, tax progressivity in many developed countries declined markedly in the eighties. In the United States in 1980 the highest tax rate stood at 70 percent. The Economic Recovery Tax Act of 1981 reduced that rate to 50 percent, and the Tax Reform Act of 1986 further reduced it to 33 percent. Although the highest rate has since been returned back up to around 34 percent, it is still less than half what it was in 1980. Other developed countries have emulated the United States in reducing their top rates, although usually by less.