The Effect of Regulatory Tax on the U.S. Economy

The Effect of Regulatory Tax on the U.S. Economy

Introduction

The global financial crisis had its origin in the U.S. market, with the subprime market failures and risks taken by investment banks Anglo-Saxon. The banks and the economic institutes such as management companies and insurance companies have shown greater strength and continued their activities financing the economy and businesses from the beginning of the crisis. The regulation on tax has been designed to fight against financial speculation that has also its affect on the facts in both considered speculative transactions and other transactions by private investors, companies and institutional investors (Mark C., n.d.). A tax whose tax base is too general present risks significant distortions and have no effect on the speculation. This paper focuses on the effect of regulatory tax on the U.S. economy.

Discussion

Economy of United States

The United States of America is recognized as one of the world's largest free market capitalist nation. For quite a long time most of the economies around the world that the economic system of the United States was based on the liberal principles. The United States of America holds the concept of mixed economy which has successfully maintained an established overall growth rate of Gross Domestic Product, a modest and restrained rate of unemployment and the alleviated levels of capital investment and research. Since 1890's it has been considered as the largest national economy of the world. In the recent times, the economy of the country holds the name of largest manufacturer of the world that represents fifth of the international manufacturing output among the top 500 largest companies of the world, 133 of them has their headquarters in the United States. The concept of the market economy does not involve removing the state from the processes of governance and regulation. On the contrary, the government should implement regulatory consolidation processes in the tax area, to create the necessary conditions for the functioning of market mechanisms, while not interfering with the production and financial activity of the entity. In different countries, even with approximately the same conditions of economic development level of state regulation of the economy is different (Richard, 2011). The greatest influence of the state is characteristic of Sweden, to a lesser extent the government is busy regulation in Germany and Japan, as well as in the U.S.

Importance of Tax Regulation

Tax regulation is a very important part of government policy that is designed after taking into account the conditions dictated by the market to balance public and private interests and to stimulate entrepreneurship. The tax system is fully independent of the conductivity in the state tax regulation, its legal registration that is reflected in the acts of higher legal force, the relevant rules, install, modify, terminating the tax obligation. In this case, one of the essential conditions of tax policy is that the interests of all sides of the tax relationship, namely, not only the interests of the state, but no less the interests of ...