TAXATION. In poetry, spring is a time when a young person’s fancy turns to thoughts of love

In poetry, spring is a time when a young person’s fancy turns to thoughts of love. But in economics, spring is much less romantic period. It is the season when millions of people in many countries begin to sort their previous year’s income and expense records—the first step in determining their personal income tax.

In calculating this tax, you are allowed to take specific types of deductions and exemptions. Some deductions that may be made (within limits) from your income are donations to your alma mater and to various non-profit organizations

The amount of income tax you must pay at a given income level depends on several things. These include whether you are single or married and what the particular tax rates happen to be at the time. The rates are usually revised by the government every few years.

Tax is money compulsory levied by the state or local authorities on individuals, property, or businesses.In modern economies taxes are the most important source of government revenues. Taxes can be levied and classified in many ways. In mane countries there are three principal types of taxes:

Taxes on income (personal income taxes and corporate income taxes);

Taxes on wealth (property taxes; death and gift taxes);

Taxes on activities (sales and excise taxes; social security taxes).

Because the power to tax is so weighty a matter, economists have developed several broad standards for judging the merits of a tax:

1.Equity. Tax burdens should be distributed justly.

2. Efficiency, Stability, and Growth. A tax should contribute toward improving resource allocation, economic stabilization, and growth in the total output of goods and services.

3. Enforceability. A tax should be adequate for its purpose and acceptable to the public, or else it will be impossible to enforce.

Taxes are considered to have three functions:

(a) fiscal or budgetary, to cover government expenditure, to provide the public authorities with the revenue required for meeting the cost of defence, social services, interest payment on the national debt, municipal services, etc.;

(b) economic, to give effect to economic policy, to promote stable economic growth, to influence the rate of economic growth of the nation;

(c) social, to increase the economic welfare of the community, to lessen inequalities in the distribution of income and wealth.

Businesses and individuals are subject to many forms of taxes. The various forms of business are not taxed equally. The tax situation is simplest for proprietorships and partnerships; corporations or companies are treated differently.

1.What are taxes?

2.What are the main functions of taxation?

3.What are the principal types of taxes?

T E X T 9

CAREERS IN FINANCE

Careers in finance vary as widely as the scope of finance itself. Some of these career paths require extensive, highly specialized knowledge and advanced degrees. Others begin with entry level positions open to enthusiastic, hard-working indi­viduals regardless of their undergraduate majors.

The scope of finance has increased so much over the past decade that the field is generally subdivided into three parts. Financial markets and institutions, financial management, and investments are commonly considered to be separate disci­plines. The study of financial markets and institutions focuses on those public and private institutions engaged in granting loans, accepting deposits, facilitating securities transfers, raising corporate funds, and regulating both the economy (domestic and global) and its financial institutions.

Financial management is concerned with how firms acquire and allocate funds. It examines how firms obtain short-term and long-term funds and how these funds are spent to acquire selected assets. Decisions regarding dividend policies, merger and acquisition activities, and leasing, all fall within the realm of the cap­ital budget. Financial management also emphasizes the cash budget and manage­ment of its components.

Investment analysis focuses on how individuals or portfolio managers select appropriate financial and real assets. It examines the markets within which fund raising and security trading take place. It explores the methodologies used by investors, providing insights into criteria for analyzing companies and industries, as well as generating norms of behavior. The study of the markets for stocks and bonds, stock and index options, warrants, and commodities and financial futures are all part of the investments area.

Careers in Institutions and Markets

Entry level positions in financial institutions and markets can include everything from bank teller to credit trainee. A person with a strong finance background would probably begin as an administrative assistant to a loan officer, or as a junior financial analyst in either the credit department or the research department of a depository institution. Positions such as customer service representative or mort­gage servicing specialist in an insurance company or a mortgage banking compa­ny, respectively, are generally staffed by people with limited finance backgrounds. More experienced individuals would be eligible for loan officer, branch manager, or senior analyst positions.

Careers in Financial Management

Entry level positions for those with associate degrees and limited experience in finance include data processing clerks, investor relations specialists, and accounts payable staff positions. Finance majors find entry level positions as junior accoun­tants in cost or financial accounting departments, budget analysts, or financial planners. Promotion opportunities generally lead to managerial positions such as cash manager, credit manager, or financial accounting manager. Senior financial man­agement positions include CFO, corporate comptroller, and treasurer.

Careers in Investments

Generally it is the investment area that attracts people to finance. They see an appealing opportunity to control multimillion dollar investment portfolios, or to be part of an investment banking institution engaged in mergers and acquisi­tions. Most brokerage houses, however, provide entry level positions as registered representatives (for those who qualify by passing specific NASD (National Association of Securities Dealers) examinations), or as investment or industry analysts. Clerical and assistant positions are always available with the major brokerage houses for those with limited experience, but excellent self-motivational skills. Senior employment opportunities include port­folio manager, senior investment analyst, and investment counselor.

1. The scope of finance is generally subdivided into three parts. What are they?

2. What does the study of financial markets and institutions focus on?

3. What is financial management concerned with?

4. What does investment analysis examine?

5. What are the parts of the investment area?

6 What can entry level positions in financial institutions include?

7. Where would a person with a strong finance background begin?

8. What can you say about entry level positions and promotion opportunities in Financial Management?

9. What are the appealing opportunities in the investment area?

Ex.11. Study the following words and word-combinations. What are their Russian equivalents?

To be out of action, to break down, (a) dead end, dud, to go dead, to go wrong, to be (or to fall) short of, to take the consequences, vicious circle, in the red, to make a loss, to pay the penalty (or price) for, to reach a stalemate, to bear fruit, the end product, in the black, to pay dividends, to pay (one’s) way, to pull off, to take effect.

Translate the following sentences into Russian.

1. If discussion between the two companies bears fruit, as seems likely, the resulting merger will bring about far-reaching changes in our industry.

2. Whether we buy coal from Australia or Germany, either way the end product is the same: we’re importing coal.

3. Shareholders will be pleased to hear that, once again, the company’s year-end results show us strongly in the black.

4. The company’s investment in staff training schemes should pay future dividends in the shape of more efficient, more effective personnel.

5. Your department is not paying its way. Unless you make cuts and improve performance, you’ll have to go. I’m afraid that’s the price you pay for the privilege of being head of department.

6. I see from the financial press that our main competitor has won a major overseas contract. I wonder how they managed to pull it off.

7. Your breach of contract is so serious that it rules out any possibility of doing further business with you. Needless to say, the contract may be regarded as terminated, such termination to take immediate effect.

8. The computer is out of action at the moment, due to an electrical fault.

9. The photocopier has broken down again. It may be due to overheating, or it could be mechanical failure.

10. This balance sheet does not give enough information. We need a complete breakdown of the figures.

11. After five years without promotion, she felt she was in a dead-end job.

12. We had high expectations of your assistant, but it seems he’s turned out to be a dud on the job, in spite of all his qualifications.

13. We negotiated with them for months. They seemed interested at first and then they went dead on us – no replies to phone calls and faxes, no letters, nothing.

14. When carrying out this experiment, it is important to remember above all to be exact and go step by step and not cut corners. If you go wrong, the results can be expensive, and dangerous. So, better safe than sorry.

15. The company’s final results put it seriously in the red and a sharp fall in its share price has taken place.

16. The company would be a more attractive for investment without its loss-making overseas activities.

17. The young executive paid the penalty for spending too much time on business; his wife left him for another man.

18. At first sight, the new manager seemed able to cope with his responsibilities. Under the acid test of stress, however, his performance fell seriously short.

19. Taking risks also involves the consequences if things go wrong.

20. Companies continuing to produce goods in a dying market are creating vicious circle.

Ex.12. Explain the meaning of the following words and phrases. Translate them into Russian. Make up your own sentences.

Saver, borrower, allocation of financial resources, financial intermediaries, ongoing expenses, inventories, credit extension, insurance, bank loan, credit card, secure funds, interest-earning instruments, liquid assets, primary market, secondary market, security trading, stock, warrant, option, financial futures.

Ex. 13. Insert the missing words given below.

Finance, profit, stockholder, financial, mutual, bondholders, legislative, comply, interrelated, managers, constraints, legal, counterparts, activities, investors, trends, predominate, recession, keystone.

All participants in the world of … have goals. While these goals may be grounded in the economic concepts of maximization of … and maximization of satisfaction, they need to be much more specific to be useful in … decisions. The financial manager of a corporation, for example, generally considers maximization of … wealth to be the firm’s primary goal. Other competing goals, combined with … restrictions, tend to favour a goal of maximization of stakeholder wealth. Consequently, it is not unreasonable to say that …,employees, community residents, and even environmentalists need to interact with the corporation in the pursuit of … interest.

Institutional financial managers, like their corporate counterparts, are torn between personal goals and constituent goals. These managers also find limits on their flexibility from … constraints imposed by regulatory agencies. Similarly, government financial … are legally constrained in their actions and must work to maximize the efficiency of financial operations relative to these … .

Individual …, serving as their own financial managers, would love to be completely free to maximize their wealth. However, they quickly find that certain …, such as insider trading, are frowned upon by the US judicial system. It should be obvious that the goal of the individual investor and that of other financial managers are closely… .

The principal … in finance today are corporate restructuring and the internationalization of finance. Restructuring was forced upon an unwilling corporate world by a … and an anemic economy recovery. Consequently, such words as downsizing or rightsizing entered the corporate vocabulary, and conservatism in financial matters has come to … . The internationalization process has developed gradually over time, but the increasing complexity of trade and the continuing growth of multinational corporations has made it a … of finance in the 1990s. Hence, all future financial decisions must now … with this new dimension.

Read the above text once again. Explain the meaning of the following words and phrases: financial decision, stockholder, legislative restrictions, regulatory agencies, individual investor, anemic economy recovery, downsizing, rightsizing.

Ex. 14. Think of the words (verbs and adjectives) that are most commonly used with:

Money, fund, activity, resources, profit, level, success, company, loan.

Ex.15.What is common and what is the difference in the meaning of the following words? Give your own sentences to show that you understand it.

Gain, earnings, profit, income, salary, wages, pay, revenue, return, receipts

Ex.16. Open the brackets.