Question

A. Robbins Corporation is a retail dealer for electrical equipment. The taxable income is $701,500. Calculate...

A. Robbins Corporation is a retail dealer for electrical equipment. The taxable income is
$701,500. Calculate the tax liability.
Corporate Tax Rates
15% $ 0–$50,000
25% $ 50,001–$75,000
34% $75,001–$10,000,000
35% over $10,000,000
Additional surtax:
•5% on income between $100,000 and $335,000.
•3% on income between $15,000,000 and $18,333,333.
B. ‘Taxes are a fact of life, and businesses, like individuals, must pay taxes on Income’ –
Elucidate.

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Answer #1
A] Normal tax liability = 50000*15%+25000*25%+(701500-75001)*34% = $   226,760
Additional surtax = (335000-100000)*5% = $     11,750
Total tax liability $   238,510
B] Taxes are levied by Government for protecting the nation and its subjects.
The objectives of such levies are resource allocation, income redistribution
and economic stability.
The benefits of the amounts spent by government are enjoyed not only by
individuals but also by other entitites. The term other entities, includes
all business units.
In reality, the business units may be enoying more benefits than individuals.
Hence, business units also have a moral responsbility to contribute to the
revenues of the governnment and there is nothing unreasonable about it.
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