Progressive Income Tax System Discussion

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  1. American businesses have often been criticized for short-term thinking that places too much emphasis on payback period and ROR. When Honda started making cars in the early 1970s, for example, the chief executive officer stated that the firm would be “willing to accept an ROR no greater than 2% or 3% for as long as it took to be recognized as the best car maker in the world.” In light of the success of many Japanese firms, is the criticism of American business justified?
  2. Most countries have a progressive income tax system whereby each dollar earned in incrementally higher tax brackets is taxed at an increasingly higher rate. Do you think that a flat tax system would be more fair? How about a proportional tax system? Explain your answer.
  3. Discuss the effect of taxes on the life-cycle costing (LCC) of passenger cars. Compare domestic and imported cars.

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Running Head: MANAGEMENT DISCUSSION

Management Discussion
(Student’s Name)
(Affiliated Institution)

MANAGEMENT DISCUSSION

2
Management Discussion

1. American businesses rely on short-term investments whose payback period is shorter,
with less rate of return. Most American business enterprises are risk-averse, hence less
investment as they depend on short-term forecasting (de Oliveira et al.,2018). Japanese
firms like long term investments whose payback period takes a longer time than
American businesses. For instance, Honda invested heavily for a long time, which took
many years before its break-even or payback period. But in the end, its investment paid
back. Honda made a risk, which is precisely opposite to American businesses. Because of
such differences, American enterprises are criticized; hence the reason is justifiable.
2. It is worth noting that most countries use a progressive income tax system due to its
merits. It is equitable to the income of taxable persons. The more an individual earns, the
more he or she pays (Barrios et al.,2020). The system utilizes the ability to pay principal
and reduces disparities in income and wealth distributions. Most importantly, it yields
maximum revenue to the government. Contrary, a flat tax system has a low impact as
income and wealth are not equitably distributed. It negatively affects taxable persons
living below the poverty l...


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