How Progressive Tax Works in Practice

To say that the percentage of tax you pay is determined by the amount you earn can mislead people. Although an individual who earns $60,000 will pay a higher tax rate than somebody who earns $20,000 they will not pay this higher rate for the full $60,000.

So let’s imagine that the individual who earns $20,000 will pay tax at a rate of 10%. The individual who earns $60,000 might pay 10% for the first $20,000 of their money, 15% on their earnings from $20,000 to $40,000, and 20% on all the money they earn above $40,000. As you can see here then they will not be paying the 20% rate for all their income; only the amount over $40,000. Working out the tax that people need to pay can be a bit complicated if you are not good with mathematics. Here the individual earning $20,000 would pay $2,000 while the person earning $60,000 would pay $9,000.

The above examples only give an idea of how things work in practice. In reality things can be a lot more complicated. People will be able to reduce their tax bill due to different available deductions. They will also pay a lot of tax on taxable goods. In fact, over the course of a year the individual may pay a lot more in sales tax then they have paid in income tax.

The Arguments for and Against Progressive Tax

There is a lot of support for a progressive tax system because it is considered fair. Those individuals who earn more money should be expected to give more back to society. Those who are less well off just can’t afford to pay a lot of tax so they shouldn’t be expected to. It is in everyone’s interest to prevent poverty and hardship within a society. This isn’t only for moral reasons but also for practical ones too. When poverty is high it leads to increasing crime and social unrest.

Other people argue that those who earn more money should pay a lower rate of tax. This would still mean that they would be pay more tax than the average person, but considerably less than they are now. This type of system is viewed as fairer to the rich who can pay huge sums of money each year in tax. It is argued that by allowing these people to pay less tax they will be more productive and this will be better for the economy.

Federal Accounting Standards Advisory Board

FASAB has been tasked with the job of developing accounting standards for federal agencies. The aim is to ensure that all financial reports are easy to read, relevant, and reliable. This agency is constantly working to improve the accounting systems within the organizations that fall under their control. The aim is not only to ensure that such government accounting complies with the law but that it is also as effective as possible.

Governmental Accounting Standards Board

GASB has the responsibility for developing standards which affect local and state organizations. Its role is very similar to FASAB but it is a private non-governmental body. The Financial Accounting Foundation oversees the work of GASB. It regularly provides technical updates and bulletins to ensure that accounting is as effective as possible at this level of public affairs.

How Government Accounting Works in Practice

Public sector entities not only have to consider their current funds but also any other money that will become available throughout the year. Most of this money will come from government funds or from local taxes. Decisions about how much money will be allocated to the different public sector departments will usually be made months in advance. It is important that these agencies are able to work out how much money they are going to need over a year so that they can know how much money they will need.

Budgets, Appropriations, and Encumbrances are the main method for splitting up government accounting and involve:

• Budgets are the money the public bodies will need for the year
• Appropriations refer to a particular amount of money that is set aside for a specific project. For instance, if there is a project to create a new back to work scheme there will be money set aside just for this. This money will then be considered separate from other funds as it will only be available for that one project. If there is a need to remove money from appropriations there will usually be a lot of paperwork involved.
• Government bodies will usually have costs associated with keeping them operating. This money is referred to as encumbrances. This fund could include things like payroll and purchases of new equipment.

Government accounting differs from the type of accounting used in an average business. It has to because it needs to because the environment is very different. This type of accounting faces special challenges because of the possibilities of waste. It is also a type of accounting that can come under a lot of scrutiny.

That may have been the way business intelligence used to be presented, but these days the concept is quite a different thing to the stereotype that most people imagine. Nowadays, business intelligence isn’t just for analysts and data techies to get their heads around. The growing demand for reliable, interpretable data that can help even the smallest of business owners in their decision making has led to some big changes in the way BI is presented and accessed.

The fact is that more and more business owners are realizing the crucial value of trustworthy data when it comes to marketing their products and services, and this has not gone unnoticed by business intelligence professionals.

The infographic below you’re about to look at (courtesy of DOMO) demonstrates how far it has come.

Created By DomoTechnologies, Inc.

It’s easy to see why the business intelligence community is heading in this direction (if we can call them that?). There’s a thirst for knowledge out there amongst small businesses and entrepreneurs, out of necessity in these economic times. Business intelligence equates to better decision making and bigger successes, so often the driving force for growth, but now especially – one of survival.

So what is an Omnibus Account?

An omnibus account is a kind of stock holding account where multiple investors are involved. This account is managed by a futures manager (sometimes called a money manager or stock broker). It is the job of this money manager to use the account to trade on behalf of all the different investors. With this type of account it does not have the name of the investors associated with it. Instead these investors are similar to stock holders but instead of having stock in a company they have stock in an investment account.

A similar idea to the omnibus account is the ‘street account’. Here the investor leaves stock in the name of the broker. This way the investor doesn’t have to be too involved with the responsibilities associated with owning stock. A lot of the work can be completely taken over by the broker so it is very convenient. So long as the broker is competent and working in the investor’s best interests it can work out very well. The main problem with this type of investment is that the actual stock owner will not be participating in the business.

The Benefits of an Omnibus Account

The main benefit of an omnibus account is that it tends to pay off dividends a lot more frequently than other types of investments. This type of account will tend to be managed by highly competent individuals how manage the money wisely in order to get the most profit without taking too many risks. The other nice thing about this type of account is that it usually allows the investor to keep a very close eye on what is going on with their investment.

The overall benefit of the omnibus account is that it cuts out a lot of red tape. Buying and selling stock takes time and effort, but the individual managing the account can do this for everyone involved. The fact that this individual will be highly competent should mean that they make good decisions. The fact that they will be depending on success themselves to get paid means that they too are heavily invested in making the investment a success. They will also have lots of relationships within the investment community that will give them the edge when it comes to making profits.

An omnibus account is going to suit a lot of individuals but it probably is not a good choice for everyone. It is always important to consider the pros and cons of such an investment before choosing it. It is vital that the money manager handling the account is highly competent with a good reputation.

So What Are the Most Common Human Resources Issues?

The following issues are things that tend to come up frequently with human resource management:

• In order for a business to function at peak performance the right people have to be doing the right jobs. There can be a lot of competition to acquire the best people but these will be required if a business really wants to be sure of success. The HR department will regularly have vacancies that need to be filled. It is their job to ensure that this happens quickly and effectively.
• Just having the best people is not enough to ensure success. It is also vital that these individuals are productive. The human resources department needs to be able to find any blocks that are preventing people from doing their job correctly – they then have to rectify these problems. It is also important that they monitor employees to ensure that everyone is pulling their weight.
• In order for team members to do their job effectively they will need constant training. People will come into the world of work with qualifications but these are usually not enough to last a full career. Things change as we find better ways of doing things; in some industries things can change on an almost daily basis. It is also true that people can lose their skills if they are not receiving updates and refresher courses. It is up to the HR department to ensure that every member of the team received the proper training they need. There may also be mandatory courses such as lifting and handling along with fire safety.
• Nowadays there is a lot of emphasis on diversity within the workplace. This is needed to promote fairness and social cohesion. It can also greatly benefit a business to have team members from a variety of backgrounds. The human resources need to understand about diversity as well as any legal obligations the company may be under.
• It is now common practice for businesses to outsource a lot of their work. This will often work out to be the most cost-effective way of doing things. HR may play a role in deciding what gets outsourced to where.
• In order to keep team members productive and happy there needs to be incentives. Most business will have bonuses and benefits to reward staff members for their hard work.

• You need to seek out those sellers that specialize in dealing with customers who have bad credit. You can find out about such dealerships online or from people you know. There are a lot of people in a similar situation so you are likely to find these car sellers in most urban areas.
• One thing that you should expect when looking for finance with bad credit is to be asked to pay a deposit. The amount this will be varies but it is unlikely that you will get any credit without providing this. If you are unable to put down sufficient funds now you may have to wait and save some money.
• All that the finance agent really wants to know is that you are good for any money they lend you. You need to be able to convince them that you will be able to make the repayments despite your bad credit rating. You do this by providing documentation of your income and available spare cash that you will use to pay off the car. You will be expected to provide documents such as payslips, bills, and proof of address.
• You will probably be asked to pay a higher interest rate than lenders with a good credit rating. Think about this carefully and make sure that the vehicle is going to be worth the expense.
• You will want to check out a few options before deciding on the best deal. Remember that if one finance company is prepared to give you a loan that there are sure to be others. If you just accept the first finance you are offered it will be unlikely that you have found the best deal.
• Never agree to any finance repayment scheme unless you are sure that you can live with it. Work on the amount of money you can afford to pay now and not on expectations of improved finances in the future. If you can’t afford the repayments on the car don’t ask for finance.
• You are more likely to get finance for a car that is considered high quality. This does not mean an expensive car but one that is considered dependable.

The Benefits of Backward Integration

The decision to choose backward integration is huge decision for any business. They need to be sure that such a maneuver is going to lead to increased profit. If they were to buy a supplier or vendor that wasn’t viable it could easily end up destroying both companies. The business then that is considering such a move will need to decide how it will be profitable. If it is one of their main suppliers then it may lead to huge savings in regards to these supplies. If the supplier has a good customer base then it may already be a good purchase because of the likelihood of continued profits.

If a supplier is charging too much for their products it can be another reason to choose backward integration. This is particular useful when the supplier has some type of monopoly over the supply in question – maybe they are the only business providing this product in a certain location. Rather than paying so much money for supplies the business may decide to buy the company. This way in future they can be sure of getting these supplies at a much more reasonable cost. Of course the company in question will need to agree to such an acquisition.

In some situations backward integration may involve a number of different businesses. This can occur when a supplier is struggling to stay in business and there is a risk that they could go bankrupt. If there are businesses that depend on this supplier then it may mean trouble for them should this supplier fail. It may not be feasible for one of these businesses to take over the supplier so instead a group of business may come together to acquire the supplier. That way they will all be sure of continued supplies without taking all the risk of buying the failing business. This type of backward integration can work out very well for everyone involved in it. The supplier will be able to make it through the tough period and those businesses that have acquired it will in future be able to get their supplies for a cheaper rate.

Some Final Thoughts on Backward Integration

There are many good reasons for why a business may decide to join forces with their suppliers or vendors. In many cases such backward integration will prove successful but there is always going to be at least some risk involved. This is especially true when a failing company is acquired unless the situation that is causing the poor performance is resolved.

Deductible.  The deductible is the amount you are responsible for paying should you ever be in the situation to have to make an insurance claim.  Let’s say you get into a little fender bender.  If your deductible is $500, then you will have to pay the first $500 and the insurance company will have to pay everything after that.  A very simple way to lower your insurance bill is to raise your deductible.  That only makes sense, considering  a higher deductible for you means less out of pocket for your insurance company.

Medical coverage duplications.  If you have health insurance with medical coverage, then it is just not necessary for you to carry that same coverage through your automobile insurance company.  It’s not like the insurance companies are going to pay double your bill, and you shouldn’t either.

Choice of vehicle.  Drive a car that’s cheap to insure.  If your car is safe, easy (and inexpensive) to work on, and not too tempting to thieves, then you can expect to pay much less for your insurance than if you were to drive a European sports car, per se.

Low mileage.  Many insurance companies offer low mileage discounts, so try to drive your car less often.  Car pool, take public transportation, or even walk or ride a bicycle when possible to lower both your car insurance bill and your carbon footprint.

Safety gear.  The more safety features your car has, the less expensive your insurance bill will be.  This pertains to air bags, anti-lock brakes, automatic seatbelts, and car alarms.

One carrier.  You can often get a discount on insurance by purchasing all of your insurance needs – homeowner’s, health, life, and auto – through one carrier.

Special discounts.  Ask your insurance company about any and all special discounts that they offer.  You might be surprised at what you qualify for, for being a student (or a parent of a student), a senior, a safe driver or more.

There are many ways to cut back on your auto insurance bill.  Call your insurance carrier today to see how many of these tips apply to you.

About the Author: Dona Collins is a freelance writer with a passion for saving money. When she’s not writing about personal finance she can be found teaching college graduates how to use IT staffing services and agencies to find new work.

The Global Economic System: How Liquidity Shocks Affect Financial Institutions and Lead to Economic Crises by George Chacko, Carolyn L. Evans, Hans Gunawan and Anders L. Sjoman(2011)

This book examines the different global financial systems; in particular the focus is on liquidity. It not only looks at the way these institutions work but also what causes them to fail. If you want to know how a financial crisis really impacts an economy this will be an indispensable text. It does not cover all the aspects of global economics, but it does provide an insightful look at the liquidity crisis in an international context.

The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade by Pietra Rivoli (2009)

This book only focuses on a tiny aspect of the economy – the life of a t-shirt. By looking at just this one product though, the writers are able to delve into many aspects of the global economy. It is a truly fascinating read and you are sure to pick up plenty of new information. This book shows how the different parts of the global economy fit in with each other. It does all this with just a simple t-shirt as a starting point.

The Economics of Global Turbulence by Robert Brenner(2006)

This book offers a unique look at the current global economy. The views reached in the text won’t be shared by everyone, but the arguments provided by the author are compelling and backed with evidence. This is an easy book to read and many readers will find that it is hard to put down.

Managing in a Global Economy: Demystifying International Macroeconomics by John E. Marthinsen (2007)

Although this book is written specifically for MBA students it is suitable for almost anyone with an interest in international macroeconomics. The author does a good job of explaining this topic in simple terms and with plenty of real world examples. By the time the reader has finished a few chapters they should feel that they understand the global economy a lot better. It is also good book to have in your library for reference purposes.

The Complete Idiot’s Guide to Global Economics by Craig Hovey and Gregory Rehmke (2008)

I’m not a huge fan of the Complete Idiot’s Guide series but this book on Global economics is one of the better ones. It covers all the main topics in enough depth to allow the reader to get a good idea about the main issues. This is probably more useful as an introduction from which to explore issues further with more reading. If you just want a basic understanding of global economics it will be perfect.

Price Elasticity in the Real World

Price elasticity is also concerned with the amount people will be willing to pay for a product. If somebody has a low income they may be only willing to pay less for a product than somebody with a higher income. The person with the low income could be described as having low price elasticity because they are limited in the amount of money they can spend. Alternatively the individual can be said to have high price elasticity because they can afford to spend a lot more money on a product.

An understanding of price elasticity can greatly help our understanding of how things happen in the real world. If there are many similar products available then increasing price of one brand will usually lead to a fall in demand. This is because consumers can see that they can get a similar product for a cheaper price. If the item has a unique place in the market then price elasticity can have a different effect. A good example of this is gasoline. Even when prices increase at the pump the demand will stay almost constant. This is because there are no alternatives and people feel that buying this fuel is a necessity. If a unique item isn’t a necessity then people may respond to a price increase by just not using it anymore.

The Importance of Price Elasticity

An understanding of price elasticity can be very important for anyone who intends to sell products. They will want to know what is likely to happen should they decide to increase or decrease the price for their goods. There are complex mathematical formulas that can allow good predictions of price elasticity and these can be very useful. If a manufacturer can see that by raising their prices they will earn more money it will be a good path to follow. So long as the profits from the price increase outweigh any drop in demand it will be a good move. In fact with some products a price increase can actually increase demand because it makes them appear more exclusive.

The manufacturer or seller will also want to know what will happen if they reduce their prices. If this were to lead to an increase in demand then it could be a very shrewd move. If price elasticity is high the company may be able to make a lot more money by reducing the amount they charge for their products. Alternatively if decreasing the price of products is unlikely to have much impact on demand the company will want to know this before they make such a move.