Today when considering investing in business assets accountants always look at t

Question

Today when considering investing in business assets accountants always look at the tax implication. Governments (federal, state and local) tax many business activities but also give tax breaks for many business activities. As an example, businesses can often "write-off" certain business assets much more quickly if those assets are used in manufacturing. Should taxation policy be used to encourage businesses to act in certain ways, or do these tax policies really amount to nothing more than "corporate welfare" and do they unduly favor certain businesses and industries?

Explanation / Answer

THe very purpose of taxation is fund raising for social and economic cause of Government. The Funds which are raised from taxataion are one of the sources of Government. Taxation policy framed keeping the expenditure requirement of Govt and its funding capacity. Encourage the business activity is one of the motives of Govt. by giving incentives or tax breaks.

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