Tax Interest Rates Research Articles

CAPITAL STRUCTURE AND ITS DETERMINANTS OF EXTERNAL FINANCING OF SMALL BUSINESSES IN MBEYA CITY, TANZANIA

Small business owners are the breeding ground for medium and large enterprises in the the emerging and developed world economy. However, it is not clear what theories apply in the capital structure of small business owners and determinants of being financed in Mbeya City. The present study assessed the capital structure for small business owners in Mbeya City and its determinant of external financing. Thus, purposive sampling technique was used to select a total of 80 small business owners and employed both descriptive statistics and quantitative approaches. Findings showed that capital structure of small business owners was dominated by internal followed by external sources as startup of businesses. Moreover, findings showed that all predictor variables interest rate, collateral and audited financial records were statistically significant and directly related with the ability of financial institutions in financing small businesses. Based on these findings, it is therefore concluded that interest rate, collateral and audited financial records are the determinants of the financial institutions in financing small businesses. So, results have impact on how small business owners are creative in financing business. This has an implication to policymakers on how to raise creativeness in decision making to ensure business performance. Consequently, findings provide the motive to those who intends to engage in business on how to mobilize capital for sustainable business. Thus, it is recommended that government should create a favorable environment by reducing tax interest rates to increase retained earnings and enable in accessing external funding.

ЭКОНОМИЧЕСКАЯ ЗНАЧИМОСТЬ НАЛОГА НА ДОХОДЫ ФИЗИЧЕСКИХ ЛИЦ И ПУТИ ЕГО СОВЕРШЕНСТВОВАНИЯ

This article discusses the economic essence of the personal income tax with the identification of the main category of its taxpayers, the tax base and the object of taxation. In addition, much attention is paid to the diversity of income tax interest rates, covering the range from 9 to 35%, with an explanation of each type and group of persons to whom it applies. The article also contains information on the main types of tax deductions.

Capital Taxation and Rent Seeking

Nous étudions l’imposition optimale du capital dans une économie en concurrence imparfaite, où le profit économique se transforme en rémunération des facteurs privés utilisés pour la recherche de rente. L’impôt optimal sur le revenu du capital compense la différence entre les rendements marginaux social et privé du capital, résultant de la recherche de rente, et la différence entre le taux d’intérêt avant imposition et la productivité marginale du capital, qui découle de la concurrence imparfaite. Le taux optimal d’imposition du revenu du capital ne dépend ni des autres impôts, ni de la charge fiscale globale, et numériquement il est proche de zéro. JEL codes : H21, E62

ANALISA PEMAKAIAN ALAT BERAT EXCAVATOR DENGAN STRAIGHT LINE DAN REDUCING CHARGE METHOD

PT. Gramita Eka Saroja, which is engaged in providing construction services in Meulaboh, West Aceh Regency, has heavy equipment that requires initial investment and a significant operating cost. Technically the existing equipment can still be operated and be able to produce, but it is economically unprofitable. In the case of the issues raised by this study, it is closely related to the estimated cost of owning an excavator heavy equipment so that the company can overcome the problems related to the use of the tool by determining the depreciation and economic value of the tool. Based on the explanation, the problem and the objective of this research are how much the cost of owning costs must be calculated as long as the equipment is operated from new (purchase) in 2007 to 2018 with the economic life of the excavator heavy equipment is 11 years of use, if it is considered depreciating based on the straight-line method and the depreciation method decreases every year. Based on the calculation of depreciation per year by the straight-line method of Rp. 38,636,364 per year, with working hours Rp. 100,000 per hour / year. In the method of a balanced reduction in depreciation in 2007 Rp. 100,413,223 and in 2018 amounting to Rp. 20,059,008, while the total value of the year produced Rp. 95,764,463 with a 2007 book value of Rp. 187,471,826 and in 2018 amounting to Rp. 8,705,860 with a book value (residual value per year) Rp. 100,413,223. Bank, insurance and tax interest rates are Rp. 18,953 per hour. Keywords: excavator, owning cost, depreciation, economic life.

To Save Or To Spend: That Is The Tax Question?

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: Times New Roman; font-size: x-small;">While the effects of interest rates on consumption and savings has always been a concern to economists, there is still a great debate regarding the magnitude of the after-tax interest rate effect on savings. The response of consumption and savings to such changes in after tax interest rates potentially alter the United States private savings rate, which may influence our economic growth. While the Federal Reserve has executed the most aggressive expansionary monetary policy in history by lowering the Federal Funds interest rate by more than 10 times in the past year in an attempt to increase consumption to rebound from the current recession, this may ultimately reduce savings.<span style="mso-spacerun: yes;">  </span>If savings fall, it potentially reduces our ability to spend in the future? In Solow's Growth model, the biggest determinant of future growth in an economy is the savings rate. The current savings rate in the US is at an all time low and is much lower than that of other nations, such as Germany and Japan. So, how can policy makers increase savings in the US? Can the U.S. increase savings by lowering the capital gains tax rate, which changes the after tax return on capital investment? If so, how effective will President Bush's proposed capital gains tax cut be on altering our savings rate?<span style="mso-spacerun: yes;">  </span>To better understand after-tax interest rate effects on savings, one needs to discover the interest elasticity of savings to different types of taxes, such as capital gains and consumption taxes. If the private savings rate is sensitive to the after-tax interest rate return, then a capital gains tax, income tax, and sales tax will have very different effects on savings. The more sensitive the savings rate is to the after tax interest rate, the more an increase in the after tax interest rate will cause an increase in savings.<span style="mso-spacerun: yes;">  </span>To assess the current interest elasticity of consumption/savings on the after tax real return of interest, I build on Boskin's (1978) model with a simultaneous equations model and more recent data. Specifically, I estimate the log of consumption on wealth, unemployment, interest rates, and disposable private income, and the after tax return of the Moody's AAA Bond Rate. To avoid the potential endogeneity bias between these variables, I use a simultaneous equation approach. Results will help determine if the U.S. can increase its savings by lowering the tax rates on investment. In general, this paper finds that the elasticity of substitution is close to .2, which suggests that the elasticity of substitution is quite small and stable. As Feldstein suggests this shows that a reduction in an income or sales tax will generate greater savings than a reduction in the capital gains income tax. </span></p>

The Swedish banking crisis: roots and consequences

The article analyses the Swedish banking crisis in the early 1990s. Newly deregulated credit markets after 1985 stimulated a competitive process between financial institutions where expansion was given priority. Combined with an expansive macro policy, this contributed to an asset price boom. The subsequent crisis resulted from a highly leveraged private sector being simultaneously hit by three major exogenous events: a shift in monetary policy with an increase in pre-tax interest rates, a tax reform that increased after tax interest rates, and the ERM crisis. Combined with some overinvestment in commercial property, high real interest rates contributed to breaking the boom in real estate prices and triggering a downward price spiral resulting in bankruptcies and massive credit losses. The government rescued the banking system by issuing a general guarantee of bank obligations. The total direct cost to the taxpayer of the salvage has been estimated at around 2 per cent of GDP.

Inflation, Real Interest Tax Wedges, and Capital Formation

Inflation magnifies the distorting effects of taxation when the tax treatment of interest income and expense is not fully indexed to inflation. The distortion involves a real interest tax wedge which is the difference between the real before tax interest rate that influences fully taxed investors and the real after tax interest rate that influences savers. Reducing the real tax wedge by eliminating inflation or indexing would stimulate private saving and non-residential investment, but decrease tax receipts and the tax deductions that subsidize home ownership.

Purchasing Power Parity and Real After Tax Interest Rate Arbitrage

This paper examines the relationship between the goods market and capital market arbitrage conditions. It is shown that in a well integrated international capital market in which investors are concerned with real after tax rates of return, purchasing power parity will not necessarily hold even in the long run even if all shocks are moentary in nature. In such a world, the real exchange rate is not independent of relative inflation rates. Alternative tax regimes are investigated and some informational eimpirical evidence is presented.