What Is Tax Avoidance? The term tax avoidance refers to the use of legal methods to minimize the amount of income tax owed by an individual or a business. This is generally accomplished by claiming as many deductions and credits as are allowable. It may also be achieved by prioritizing investments that have tax advantages
Defining Tax Exempt Tax-exempt refers to income or transactions that are free from tax at the federal, state, or local level. The reporting of tax-free items may be on a taxpayer’s individual or business tax return and shown for informational purposes only. The tax-exempt article is not part of any tax calculations. Tax-exempt may also refer
What Is Tax Fairness? Tax fairness is a concept which stipulates that a government’s tax system should be equitable to all citizens. Opinions differ, however, in just how to reach tax fairness. The solutions are varied, but most fall under three broad systems of taxation. They include regressive taxation, progressive taxation, and blended taxation. Key
What Is a Tax Incidence? “Tax incidence” (or incidence of tax) is an economic term for understanding the division of a tax burden between stakeholders, such as buyers and sellers or producers and consumers. Tax incidence can also be related to the price elasticity of supply and demand. When supply is more elastic than demand, the
What Is a Tax Wedge? A tax wedge is the difference between before-tax and after-tax wages. The tax wedge measures how much the government ostensibly receives as a result of taxing the labor force. Tax wedge may also refer to the market inefficiency that is created when a tax is imposed on a good or
What Is Taxation Without Representation? The phrase taxation without representation describes a populace that is required to pay taxes to a government authority without having any say in that government’s policies. The term has its origin in a slogan of the American colonials against their British rulers: “Taxation without representation is tyranny.” Key Takeaways Taxation
What Is a Taxable Spinoff? A taxable spinoff is a divestiture of a subsidiary or division by a publicly-traded company, which will be subject to capital gains taxation. To qualify as a taxable transaction, the parent corporation must divest through direct sale of the division or the assets it contains. The profits made from the
What Is a Takeover Bid? A takeover bid is a type of corporate action in which a company makes an offer to purchase another company. In a takeover bid, the company that makes the offer is known as the acquirer, while the subject of the bid is referred to as the target company. The acquiring
What is a Take-Profit Order (T/P) A take-profit order (T/P) is a type of limit order that specifies the exact price at which to close out an open position for a profit. If the price of the security does not reach the limit price, the take-profit order does not get filled. Key Takeaways Take-profit (T/P) orders
What Is a Takeunder? A takeunder is an offer to purchase or acquire a public company at a price per share that is less than its current market price. A takeunder is almost always unsolicited and generally occurs when the target company is in severe financial distress—or has some other major problem that threatens its
