Summarizing. Complete the following sentences to summarize the text above:

Complete the following sentences to summarize the text above:

1. Takeovers in the USA created…

2. After the recession of the 1980s many companies had good earnings but low…

3. In the 1980s raiders discovered that stock markets were…

4. Theoretically, with a buyout there is little risk of…

5. If takeovers use borrowed money, they are called…

6. We talk of a management buyout when a company is bought by….

7. Hostile takeovers and buyouts seem to be typically… phenomenon.

8Viewpoint:

Are hostile takeovers and buyouts known in Ukraine?

11.PRINCIPLES OF TAXATION

Lead-in: What is the main purpose of taxation? Key words and phrases 1. taxation – оподаткування 2. tax revenues –податкові надходження 3. to provide medical care –забезпечувати медичною допомогою 4. to charge fees –вимагати, призначати плату 5. gross domestic product –внутрішній валовий продукт 6. to raise money –діставати гроші 7. the ability-to-pay principle –принцип платоспроможності 8. the benefits principle –принцип пільг 9. income and wealth –дохід і багатство 10. horizontal (vertical) equity –горизонтальна (вертикальна) справедливість 11. taxable income –оподаткований дохід 12. tax brackets –ступінь податкової шкали 13. tax rates –податкова ставка

Taxation is a system of raising money to finance government expenditure, but taxes can also have other purposes. Indirect excise duties, for example, can be designed to dissuade people from smoking, drinking alcohol, and so on.

Governments use tax revenues to pay soldiers and police, to operate schools and hospitals, to provide food to the poor and medical care to the elderly, and for hundreds of other purposes. Without taxes government could not exist.

Taxation is the most important source of revenues for modern governments, typically accounting for 90 per cent or more of their in­come. The remainder of government revenue comes from borrowing and from charging fees for services. Countries differ considerably in the amount of taxes they collect. In the United States, about 28 per cent of the gross domestic product, a measure of economic output, goes for tax payments. In Canada about 36 per cent of the country's gross domestic product goes for taxes. In France the figure is 44 per cent, and in Sweden it is 51 per cent.

In addition to using taxation to raise money, governments may raise or lower taxes to achieve social and economic objectives, or to achieve political popularity with certain groups. Also, some economists consider taxation an important tool for maintaining the stability of a country's economy.

Most economists believe that a tax system should follow two main principles: fairness and efficiency. Economists consider two principles of fairness: the ability-to-pay principle and the benefits principle.

The ability-to-pay principle holds that people's taxes should be based upon their ability to pay, usually as measured by income or wealth. One implication of this principle is horizontal equity, which states that people in equal positions should pay the same amount of tax.

A second requirement of the ability-to-pay principle is vertical equity, the idea that a tax system should distribute the burden fairly across people with different abilities to pay. This idea implies that a person with higher income should pay more in taxes than one with less income. But how much more?

Taxes may be proportional, progressive, or regressive. A proportional tax takes the same percentage of income from all people. A progressive tax takes a higher percentage of income as income rises. A regressive tax takes a smaller percentage of in­come: as income rises, poor people pay a larger fraction of their in­comes in taxes than rich people. Which is fairest: a proportional, progressive, or regressive system?

A progressive, proportional, or even slightly regres­sive system all can achieve vertical equity's requirement that a richer person should pay more in taxes than a poorer person. Most industrialized nations have progressive income tax systems, which impose a heavier tax burden as one's income increases. In the United States, the individual income tax system divides taxable income into different tax brackets – ranges of income with different tax rates.

In addition to being fair, a good tax system should be efficient.

Three measures of effi­ciency are administration costs, compliance costs, and excess burden.

Each society must find the best trade off between fairness and efficiency.

ØComprehension:

1. What is taxation?

2. In what way do governments use tax revenues?

3. Is taxation the most important source of revenues for modern govern­ments?

4. Countries differ considerably in the amount of taxes they collect, don’t they?

5. How many principles should a tax system follow?

6. What are the requirements of the ability-to-pay principle of taxation?

7. What tax systems do most industrialized nations have?

8. Name three measures of tax efficiency.

True-false questions:

1. Taxation is the most important source of revenues for govern­ments.	
2. Taxation is an important tool for maintaining the stability of a country's economy.	
3. Most industrialized nations have regressive income tax systems.	
4. No tax system is perfectly efficient.	
5. Each society must find the best trade off between fairness and efficiency.	

8Viewpoint:

Is it possible to make the system of taxation perfect?

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