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Financial Terms | |
Tax-Related Incomes Policy (TIP) |
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Definition of Tax-Related Incomes Policy (TIP)Tax-Related Incomes Policy (TIP)tax incentives for labor and business to induce them to conform to wage/price guidelines.
Related Terms:Accomodating PolicyA monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession. 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. Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. average tax rateTotal taxes owed divided by total income. Balanced-Budget MultiplierThe multiplier associated with a change in government spending financed by an equal change in taxes. ![]() Before-tax profit marginThe ratio of net income before taxes to net sales. Beggar-My-Neighbor PolicyA policy designed to increase an economy's prosperity at the expense of another country's prosperity. Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering Cash flow after interest and taxesNet income plus depreciation. Cold-Turkey PolicyDecreasing inflation by immediately decreasing the money growth rate to a new, low rate. Contrast with gradualism. Collection policyProcedures followed by a firm in attempting to collect accounts receivables. collection policyProcedures to collect and monitor receivables. 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 ![]() credit policyStandards set to determine the amount and nature of credit to extend to customers. 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 Delivery policyA company’s stated goal for how soon a customer order will be Demand Management PolicyFiscal or monetary policy designed to influence aggregate demand for goods and services. 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. Discretionary PolicyA policy that is a conscious, considered response to each situation as it arises. Contrast with policy rule. Dividend policyAn established guide for the firm to determine the amount of money it will pay as dividends. Dividend PolicyThis policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class. Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against 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. Equity multiplierTotal assets divided by total common stockholders' equity; the amount of total assets per Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax 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 Fiscal policyThe use of government spending and taxing for the specific purpose of stabilizing the economy. Fiscal PolicyA change in government spending or taxing, designed to influence economic activity. Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign Forward looking multipleA truncated expression for a P/E ratio that is based on forward (expected) Futures contract multipleA constant, set by an exchange, which when multiplied by the futures price gives 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 Incomes PolicyA policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example. 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. Insurance Policy (Credit Insurance)A policy under which the insurance company promises to pay a benefit of the person who is insured. 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. Joint Policy LifeOne insurance policy that covers two lives, and generally provides for payment at the time of the first insured's death. It could also be structured to pay on second death basis for estate planning purposes. Lending PolicyA course of action adopted by a financial institution to guide and usually determine present and future decisions in the light of given conditions. Limited-tax general obligation bondA general obligation bond that is limited as to revenue sources. 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. Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary PolicyActions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity. Money MultiplierChange in the money supply per change in the money base. Multiperiod immunizationA portfolio strategy in which a portfolio is created that will be capable of Multiple Deposit CreationThe process whereby the money multiplier operates. Multiple-discriminant analysis (MDA)Statistical technique for distinguishing between two groups on the Multiple-issuer poolsUnder the GNMA-II program, pools formed through the aggregation of individual Multiple LivesTwo or more death benefits based on one definition with different insureds. Multiple rates of returnMore than one rate of return from the same project that make the net present value Multiple regressionThe estimated relationship between a dependent variable and more than one explanatory variable. multiple regressiona statistical technique that uses two or MultiplesAnother name for price/earnings ratios. MultiplierChange in the equilibrium value of a variable of interest per change in a variable over which one has control. "The" multiplier is the change in equilibrium income per change in government spending. multiprocess handlingthe ability of a worker to monitor Non-participating PolicyA type of insurance policy or annuity in which the owner does not receive dividends. Options contract multipleA constant, set at $100, which when multiplied by the cash index value gives the P/E ratio (PE ratio / multiple)Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25. 50 = 10 Participating PolicyA policy offers the potential of sharing in the success of an insurance company through the receipt of dividends. 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. Perfect market view (of dividend policy)Analysis of a decision on dividend policy, in a perfect capital Personal tax view (of capital structure)The argument that the difference in personal tax rates between PolicyA written document that serves as evidence of insurance coverage and contains pertinent information about the benefits, coverage and owner, as well as its associated directives and obligations. Policy Acquisition CostsCosts incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium Policy AnniversaryYearly event linked to a policy. Usually the date issued. Policy asset allocationA long-term asset allocation method, in which the investor seeks to assess an Policy DateDate on which the insurance company assumes responsibilities for the obligations outlined in a policy. Policy FeeThis is an administrative fee which is part of most life insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular monthly, quarterly, semi-annual or annual payment that you make for your policy. Knowing about this hidden fee is important because some insurance companies offer a policy fee discount on additional policies purchased under certain conditions. Sometimes they reduce the policy fee or waive it altogether on one or more additional policies purchased at the same time and billed to the same address. The rules are slightly different depending on the insurance company. There could be enormous savings if several people in the same family or business were intending to purchase coverage at the same time. Policy FeeAdministrative charge included in a policy Premium. Policy-Ineffectiveness PropositionTheory that anticipated policy has no effect on output. Policy RuleA formula for determining policy. Contrast with discretionary policy. 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