How does sales tax holiday change tax?
I believe you are confusing sales tax with income tax. The tax holidays in the US are only for sales tax. Consumers purchasing certain goods during the tax holiday do not have to pay sales tax like they normally would. Effectively the price is slightly lower during those days with the purpose of giving people an extra reason to shop at that time. During the tax holiday the stores make the exact same profit that they normally do, but they may experience a bump in sales simply because more people will shop during that time. Income tax for both consumers and the businesses is not affected by this. Although New York state was the first state to implement a tax holiday 20 years ago, they no longer have one today, though they do have certain goods which have a lower tax rate year round.
The way I see it, corporation tax is not fundamentally different from VAT. They are both a tax on revenue minus expenses, just what those expenses are is different. I think the main advantage of corporation tax is that it allows capital expenditure to be spread over several years, although as I said this makes it more complicated (and I believe that there are some capital allowances for VAT as well).  One advantage of VAT is that sales in one country are taxed in that country before the money can be sent abroad. It seems simple and fair to split the tax burden between jurisdictions according to how many sales were made in each. "It is true, as farnsy noted, that you generally do not know when stock that you're holding has been loaned by your broker to someone for a short sale, that you generally consent to that when you sign up somewhere in the small print, and that the person who borrows has to make repay and dividends. The broker is on the hook to make sure that your stock is available for you to sell when you want, so there's limited risk there. There are some risks to having your stock loaned though.  The main one is that you don't actually get the dividend.  Formally, you get a ""Substitute Payment in Lieu of Dividends.""  The payment in lieu will be taxed differently.  Whereas qualified dividends get reported on Form 1099-DIV and get special tax treatment, substitute payments get reported on Form 1099-MISC. (Box 8 is just for this purpose.)  Substitute payments get taxed as regular income, not at the preferred rate for dividends. The broker may or may not give you additional money beyond the dividend to compensate you for the extra tax. Whether or not this tax difference matters, depends on how much you're getting in dividends, your tax bracket, and to some extent your general perspective. If you want to vote your shares and exercise your ownership rights, then there are also some risks.  The company only issues ballots for the number of shares issued by them.  On the broker's books, however, the short sale may result in more long positions than there are total shares of stock. Financially the ""extra"" longs are offset by shorts, but for voting this does not balance. (I'm unclear how this is resolved - I've read that the the brokers essentially depend on shareholder apathy, but I'd guess there's more to it than that.) If you want to prevent your broker from loaning out your shares, you have some options:" I know a guy on a much higher rate than me, about £500 per day, and he claims to pay around 18% tax which has me bewildered He will be showing expenses, which are deductible. Check with your accountant about expenses, which can be legally claimed as expenses. This is the main benefit of operating through a limited company. Legtimate business expenses can be claimed, which you cannot do if you are a permanent employee. Your friend might also be claiming false expenses, with a shady accountant. If HMRC does decide to give a call, he might have to pay n times the money he has saved till now. And my suggestion is always ask your accountant first. He(she) knows the legal stuff, so he(she) would give you the legally correct options. If you aren't comfortable with him(her), you can always change accountants. holiday pay, sick pay and job security You miss those that is why you are paid at a rate much higher than an employee.  benefit of a limited company  You can arrange your salary to pay no PAYE and take the rest as dividends. You willn't have to pay PAYE on that. Secondly if you have a partner(s), all of you can be paid dividends without paying PAYE(if you don't cross the threshold). No, you will (generally speaking) not see a decrease in your net earnings from crossing a tax bracket: This means that your highest marginal rate (the top bracket you fall into) only applies to the portion of your income that is in that bracket, not your total income. This helps ensure that your total tax burden does not increase measurably from crossing a tax bracket. Be aware that you can still see measurable changes in your total taxes due if increases in income make you no longer eligible for certain deductions and/or benefits that were otherwise reducing your tax burden, but this is not the same as how changes in your highest marginal rate affect your overall average tax rate. Note that when you see a rate table such as the one on efile.com's federal income tax rates page or on Wikipedia's Income tax in the United States page, the rates listed are for each segment of income, not for your overall income: In other words the 15% rate below (for 2014, filing single) only applies to the portion of your income falling between the listed numbers, not to income below it or above it: that would be calculated under the respective rates given. You can use the i1040tt tax tables to gain a sense of how this works in practice: (The linked resource is for 2014 taxes) The threshold in 2014 for the 25% rate vs 15% was $36,900. Using the linked table, if you were single and made between 36,850 and 36,900 in gross income, your tax liability before other considerations was $5,078. If you made between 36,900 and 36,950, your base tax liability was $5,088. The focus of this article isn't on tax revenue. The author is discussing income disparity.   The laffer curve doesn't tell the whole story. You are correct, a higher tax rate does not imply higher tax revenue, and a lower tax rate does not imply less revenue. Changing tax rates isn't going to significantly affect tax revenue. However, there are a broad range of other effects when changing tax rates. In evaluating adjustments to tax rates, our focus needs to be on these secondary effects.   We are taxed on *income* not *revenue*.  When I sell you a $10 widget that I paid a worker $2 to produce from $5 of materials, I pay taxes on the $3 net income, not the $10 revenue I received from you.    The main way businesses avoid high marginal tax rates is by increasing deductible expenses, such that their net income after these expenses keeps them below their desired tax bracket.  It is far better to spend that money on something that can benefit the business than simply give it to the government. Any businessman would rather keep his earnings if possible. If that is not possible, he'd prefer to spend them on something that can help him, rather than squandering it on junk or giving it away to the government.   For most businesses, the largest deductible expense is payroll. Any decent employer would prefer to pay out a Christmas bonus instead of giving that same amount to Uncle Sam. Any businessman would prefer to pay for additional advertising, or a charitable donation to a worthy cause, rather than paying the IRS.   Run up the top-tier tax rate and suddenly, businessmen feel a compelling need to lower their prices and pay their workers more. Run up the tax rate, and income disparity shrinks.  Run up the tax rate, and you put more money in the hands of consumers. To expand a little on what littleadv said, you can only deduct what something cost you. Even if you had done volunteer work for a charity as a sole prop you could only deduct your actual costs. If you paid an employee to do charity work or to learn something related to the business that would be deductible as a normal business expense.  Some common sense would show that if you could deduct something that didn't cost you anything (your time) you could deduct away all of your income and avoid paying taxes altogether. Back to your more nuanced question could 2 businesses you own bill each other for services? Yes, but you will still have to pay taxes for money earned under each of them. You will also need to be careful that the IRS does not construe the transactions as being done solely to lower your tax bill. If your deductions are higher than the standard deduction, you will be able to subtract property taxes from your income. In your example, that means that taxes are computed based on $95,000. In 2011, the standard deduction varies between $5,800 (single filer) and $11,600 (married filing jointly). Tax credits are subtracted from your tax obligation. The most common tax credit for most people is student loan interest. If you pay $500 in student loan interest, that sum is subtracted from your tax bill. "So you are back to saying that the price Walmart charges for each item depends on the income level of the purchaser.  That's not fair, so neither are taxes based on the income levels of taxpayers.  I don't think road sweepers should be subsidized so they can drive a Rolls Royce car. And I don't think they should be allowed to live in a Rolls Royce location unless they can afford to compensate those they exclude from it.  The fact they currently are is outrageous as it causes a shrunken economy and excessive inequalities.    Real estate bubbles are caused by not have a LVT. Obviously there could be no ""bubble"" as it would have already been taxed away."