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Financial Terms | |
Progressive tax system |
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Definition of Progressive tax systemProgressive tax systemA tax system wherein the average tax rate increases for some increases in income but
Related Terms:Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Accounting systemA set of accounts that summarize the transactions of a business that have been recorded on source documents. actual cost systema valuation method that uses actual direct After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Automated storage/retrieval systemA racking system using automated systems ![]() Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. average tax rateTotal taxes owed divided by total income. Before-tax profit marginThe ratio of net income before taxes to net sales. Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering business intelligence (BI) systema formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about Cash flow after interest and taxesNet income plus depreciation. charge-back systema system using transfer prices; see transfer Clearing House Automated Payments System (CHAPS)A computerized clearing system for sterling funds Clearing House Interbank Payments System (CHIPS)An international wire transfer system for high-value ![]() Corporate tax viewThe argument that double (corporate and individual) taxation of equity returns makes Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to cost control systema logical structure of formal and/or informal cost management system (CMS)a set of formal methods Current Income Tax ExpenseThat portion of the total income tax provision that is based on Current Tax Payment Act of 1943A federal Act requiring employers to withhold income taxes from employee pay. Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Deferred Tax AssetFuture tax benefit that results from (1) the origination of a temporary difference Deferred Tax LiabilityFuture tax obligation that results from the origination of a temporary Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Depreciation tax shieldThe value of the tax write-off on depreciation of plant and equipment. ![]() depreciation tax shieldReduction in taxes attributable to the depreciation allowance. Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against Du Pont systemA breakdown of ROE and ROA into component ratios. Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms earnings before interest and income tax (EBIT)A measure of profit that Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting interest and tax. Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting interest, tax, depreciation and amortization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working EBDDT - Earnings before depreciation and deferred taxesThis measure is used principally by Effective Tax RateThe total tax provision divided by pretax book income from continuing Electronic Federal Tax Payment Systems (EFTPS)An electronic funds transfer system used by businesses to remit taxes to the government. enterprise resource planning (ERP) systema packaged software program that allows a company to Enterprise resource planning systemA computer system used to manage all company Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Federal Reserve SystemThe central bank of the U.S., established in 1913, and governed by the Federal Federal Reserve SystemThe central banking authority responsible for monetary policy in the United States. Federal Unemployment Tax Act (FUTA)A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a flexible manufacturing system (FMS)a production system in which a single factory manufactures numerous variations Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign hybrid costing systema costing system combining characteristics Imputation tax systemArrangement by which investors who receive a dividend also receive a tax credit for INCOME TAXWhat the business paid to the IRS. Income taxA government tax on the income earned by an individual or corporation. Income Tax ExpenseSee income tax provision. Income Tax ProvisionThe expense deduction from pretax book income reported on the Indirect Taxestaxes paid by consumers when they buy goods and services. A sales tax is an example. Inflation TaxThe loss in purchasing power due to inflation eroding the real value of financial assets such as cash. Interac systemCanada's bank machine and electronic debit system. If you use your bank card at a bank machine which displays the Interac symbol (and that bank machine is not your bank's machine), you will be charged a fee. Interest equalization taxtax on foreign investment by residents of the U.S. which was abolished in 1974. Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments. interest tax shieldtax savings resulting from deductibility of interest payments. Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment Tax CreditA reduction in taxes offered to firms to induce them to increase investment spending. job order costing systema system of product costing used Just-in-time inventory systemssystems that schedule materials/inventory to arrive exactly as they are just-in-time manufacturing systema production system that attempts to acquire components and produce inventory only as needed, to minimize product defects, and to Limited-tax general obligation bondA general obligation bond that is limited as to revenue sources. lock-box systemsystem whereby customers send payments to a post office box and a local bank collects and processes checks. MACRS (Modified Accelerated Cost Recovery System)A depreciation method created by the IRS under the tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes). management control system (MCS)an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans, management information system (MIS)a structure of interrelated elements that collects, organizes, and communicates Margin Tax RateThe tax rate applicable to the last unit of income. Marginal tax rateThe tax rate that would have to be paid on any additional dollars of taxable income earned. marginal tax rateAdditional taxes owed per dollar of additional income. Marginal Tax RatePercent of an increase in income paid in tax. Modified Accelerated Cost Recovery System (MACRS)Depreciation method that allows higher tax deductions in early years and lower deductions later. Multirule systemA technical trading strategy that combines mechanical rules, such as the CRISMA Nonsystematic riskNonmarket or firm-specific risk factors that can be eliminated by diversification. Also normal cost systema valuation method that uses actual Overdraft Systemsystem whereby a depositor may write cheques in excess of the balance, with the bank automatically extending a loan to cover the shortage. Payroll tax expenseThe amount of tax associated with salaries that an employer pays to governments (federal, state, and local). Payroll taxes payableThe amount of payroll taxes owed to the various governments at the end of a period. performance management systema system reflecting the entire package of decisions regarding performance measurement and evaluation Periodic inventory systemAn inventory system in which the balance in the Inventory account is adjusted for the units sold only at the end of the period. Perpetual inventory systemAn inventory system in which the balance in the Inventory account is adjusted for the units sold each time a sale is made. Personal tax view (of capital structure)The argument that the difference in personal tax rates between Planning, programming and budgeting system (PPBS)A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres. PLUS systemA bank machine network outside Canada, across the U.S. and internationally. Customers who use a bank machine with a 'PLUS' symbol may be charged a fee. Price SystemSee market mechanism. process costing systema method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products; Profit before interest and taxes (PBIT)See EBIT. Progressive TaxA tax in which the rich pay a larger percentage of income than the poor. Contrast with regressive tax. Proportional TaxA tax taking the same percentage of income regardless of the level of income. pull systema production system dictated by product sales Pull systemA materials flow concept in which parts are only withdrawn after a push systemthe traditional production system in which Push systemA materials flow concept in which parts are issued based on planned red-line systeman inventory ordering system in which a red Regressive TaxA tax in which the poor pay a larger percentage of income than the rich. Contrast with progressive tax. responsibility accounting systeman accounting information system for successively higher-level managers about the performance of segments or subunits under the control Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |