Миловидов В.А. Английский разговорный язык. Практическое пособие по развитию устной речи
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average tax rate –
tax base –
total income –
tax burden –
Internal Revenue Service –
to some extent –
discourage from – , ()
take advantage –
tax exemption –
payroll tax –
flat rate – ,
Social Security system –
Exercise 3
Answer the questions:
1. What does the progressivity of taxes determine?
2. What is a progressive tax?
3. How do we state the relative progressivity of tax structures?
4. How did the progressive taxes change in the eighties in the developed countries?
5. How is the tax burden shifted from taxpayers to other members of the society?
6. What fraction of the overall tax return is made up by the US federal income taxes?
Marginal Tax Rates
The marginal tax rate is the rate on the last dollar of income earned. This is very different from
the average tax rate, which is the total taxes paid as a percentage of total income earned.
In the United States the concept of marginal tax rates is most familiar as tax brackets. Rapid
inflation in the seventies pushed many skilled working couples up into the 50 percent tax
bracket (then the highest rate on labour income). That did not mean that all of their income was
taxed at a 50 percent rate. Instead, the first ten thousand dollars or so might be taxed at a 12
percent rate, the next ten thousand at a higher rate, and so on. Once the 50 percent bracket
was reached, though, the workers lost an incentive to work, as they had to pay as taxes more
than they earned.
The marginal tax on added earnings matters because it is easier to earn less than to earn more.
To increase income, people have to study more, accept added risks and responsibilities,
relocate, work late or take work home, tackle the dangers of starting a new business or
investing in one, and so on. People earn more by producing more and better goods and
services. If the tax system punishes added income, it must also punish added output – that is,
economic growth. While reducing marginal tax rates, it is possible to encourage people to earn
and report more income.
Several economies that seemed on the verge of bankruptcy in the early eighties were suddenly
revived once marginal tax rates were reduced. In 1983 to 1984, Turkey's marginal tax rates
were slashed: the minimum rate dropped from 40 to 25 percent, the maximum from 75 to 50
percent. Real economic growth jumped to nearly 7 percent in the following four years and to 9
percent in 1990. Like Turkey, South Korea was deep in debt to international banks in 1980,
when real output fell 2 percent. Korea subsequently cut tax rates and expanded deductions
three times, and economic growth averaged 9.3 percent a year from 1981 to 1989. In the early
eighties the African island of Mauritius faced an unemployment rate of 23 percent and massive
emigration. Tax rates were cut from 60 percent to 35 percent, and the economy grew by 5.4
percent a year from 1981 through 1987. Egypt, Jamaica, Colombia, Chile, Bolivia, and Mexico
had similar experiences after slashing marginal tax rates.
Maximum Marginal Tax Rates on Individual Income
Despite widespread adoption of such policies, few seem to understand what marginal tax rates
are and why they matter. In the United States, for example, it is commonly believed that the
Reagan administration «slashed taxes» particularly for «the rich». Actually, real (that is,
inflation-adjusted) federal receipts increased by one-third from 1980 to 1990. Moreover, the
most affluent 5 percent of all taxpayers paid 45.9 percent of all federal income taxes in 1988 –
uprate of 70 percent to 33 percent – became actual tax increases, particularly for «the rich».
The explanation for this paradox lies in the critical distinctions between average and marginal
tax rates, and between «static» effects right now and «dynamic» effects over years and
decades. Dynamic effects include increased intensity and motivation of work effort, more
efficient investment, and more innovation and risk taking.
:
adoption –
affluent –
bankruptcy –
concept – ,
critical – ,
deduction – , , ()
despite –
distinction – ,
drop – ,
dynamic –
expand – )
experience –
familiar – ,
intensity –
jump –
matter – ,
motivation –
percentage – ,
push – ,
rapid –
relocate – ,
revive – )
similar – ,
slash –
static – ,
subsequently –
tackle – (), ()
verge – , «»
widespread –
marginal tax rate – ()
average tax rate –
total taxes –
tax bracket – , «»
taxed at a 50 percent rate – 50
once the …. was reached – …
added earnings – ,
accept added risks –
report income –
be in debt –
inflation-adjusted – , «»
federal receipts –
Exercise 4
Answer the questions:
1. What is the marginal tax rate?
2. What do Americans mean by the marginal tax rate?
3. Why does the marginal tax on added earnings matter?
4. How do the marginal tax rates affect the general output of the economy?
5. What happens to people's income if the government reduces the marginal tax?
6. What happened to some economies on the verge of bankruptcy when they slashed the
marginal tax rates?
7. How did the reduction of the marginal tax rates in the USA affect the total tax revenues?
8. Who pays the most of the taxes in the USA?
9. What is the difference between average and marginal tax rates?
10. What is the difference between static and dynamic effects of the different taxation systems?
1
A nervous taxpayer was unhappily conversing with the IRS auditor who had come to review his
records. At one point the auditor exclaimed, «We feel it is a great privilege to be allowed to live
and work in the USA. As a citizen you have an obligation to pay taxes, and we expect you to
eagerly pay them with a smile.»
«Thank God,» returned the taxpayer. «I thought you were going to want cash.»
2
The local bar was so sure that its bartender was the strongest man around that they offered a
standing $1000 bet: The bartender would squeeze a lemon until all the juice ran into a glass,
and hand the lemon to a patron. Anyone who could squeeze one more drop of juice out would
win the money. Many people had tried over time but nobody could do it.
One day this scrawny little man came into the bar, wearing thick glasses and a polyester suit,
and said in a tiny squeaky voice «I'd like to try the bet.»
After the laughter had died down, the bartender said OK, grabbed a lemon, and squeezed
away. Then he handed the wrinkled remains of the rind to the little man. The crowd's laughter
turned to total silence as the man clenched his fist around the lemon and six drops fell into the
glass.
As the crowd cheered, the bartender paid the $1000, and asked the little man «What do you do
for a living? Are you a lumberjack, a weight-lifter, or what?»
The man replied, «I work for the IRS.»
3
Psychiatrist to Internal Revenue agent on couch: «Nonsense! No way does everyone in the
world hate you – everyone in the US perhaps, but certainly not everyone in the world.»
4
A man, about to enter hospital, saw two white coated doctors searching through the flower
beds. «Excuse me,» he said, «have you lost some – thing?»
«No,» replied one of the doctors. «We're doing a heart transplant for an income-tax inspector
and want to find a suitable stone.»
5
Tony died and was sent to be judged. He was told that he had cheated on his income taxes,
and that the only way he could get into heaven would be to sleep with a stupid, butt-ugly woman
for the next five years and enjoy it. Tony decided that this was a small price to pay for an
eternity in heaven. So off he went with this woman, pretending to be happy.
As he was walking along, he saw his friend Carlos up ahead. Carlos was with an even uglier
woman than he was with. When he approached Carlos he asked him what was going on, and
Carlos replied, «I cheated on my income taxes and scammed the government out of a lot of
money.» They both shook their heads in understanding and figured that as long as they have to
be with these women, they might as well hang out together to help pass the time.
Now Tony, Carlos, and their two beastly women were walking along, minding their own
business when Tony and Carlos saw their friend Jon up ahead, with an absolutely drop dead
gorgeous supermodel. Stunned, Tony and Carlos asked Jon how is he with this unbelievable
goddess, while they were stuck with these awful women. Jon replied, «I have no idea, and I'm
definitely not complaining. This has been absolutely the best time of my life. There is only one
thing that I can't seem to understand. After everytime we have sex, she rolls over and murmurs
to herself, 'Damn income taxes!'»
:
auditor –
awful –
bartender –
beastly –
bet – ; ,
cash – ,
cheer – ,
citizen –
clench –
complain –
couch –
definitely –
eagerly – , ,
eternity –
figure – , ()
goddess –
gorgeous –
grab –
hate –
heaven –
judge –
lumberjack –
murmur –
obligation –
patron – :
polyester – ()
pretend –
privilege – , ,
psychiatrist –
remains – ,
rind – ,
scam –
scrawny – ,
search – ,
squeaky –
squeeze – ,
stuck ( stick) – ,
stun – ,
supermodel –
tiny – , ,
unbelievable –
weight-lifter –
wrinkle –
IRS (Internal Revenue Servise) –
standing $1000 bet – ,
Nonsense! – ! ! !
No way! – ! !
flower bed –
cheat on – ,
butt-ugly ( butts – ugly – )
drop dead – (.: )
hang out – ,
heart transplant–
pass the time –
roll over– ,
Damn! – !
Exercise 5
Answer the questions:
1. What is a fine?
2. What is the difference between the short and long income tax forms?
3. What is the difference between tax avoidance and tax evasion?
4. Why won't sharks attack tax inspectors?
5. How can people avoid taxes?
6. Why was the IRS agent strong enough to squeeze a lemon?
7. Why did the IRS agent go to the psychiatrist?
8. Why could a stone be used as a heart transplant for a tax-inspector?
9. What were the two butt-ugly women sent to hell for?
10. Was Jon a decent tax-payer?
7.
(Banks)
Federal Reserve System
The Federal Reserve System (the Fed) has been the central bank of the United States since it
was created in 1913. The main purpose of a central bank is to regulate the supply of money and
credit to the economy. The board of governors, the Fed's principal policy-making organization,
plays a key role in this process.
The board has seven members, two of whom serve as chairman and vice chairman. Each
governor is appointed to a fourteen-year term, while appointments to the roles of chairman and
vice chairman are for four years. The president, with confirmation by the Senate, appoints all
seven governors and designates which ones should also be confirmed as chairman and vice
chairman. The terms of Federal Reserve governors are long to insulate the members from
political pressures and foster independent decisions.
In order to regulate the nation's money supply the Federal Reserve has to influence the amount
of reserve funds available to banks and thus the level and direction of short-term interest rates.
Whether banks and other financial institutions will make loans depends on the profit margin –
the difference in the rate of interest they must pay to attract deposits or borrow funds and the
interest rate they can charge customers for credit. The greater the profit margin that banks can
realize on new loans, the more they will want to lend. To influence interest rates on deposits
and interest rates that banks pay to borrow funds, the Fed uses its congressionally granted
authority to create money. The Fed creates money in three ways.
First and most important, the Fed can purchase U.S. government securities from financial
institutions by simply creating «funds» (credits) on their balance sheets in exchange for the
securities. As some banks recieve extra reserves, they lend these funds to other banks
overnight to earn interest. The increased supply of reserves relative to demand in the money
market pushes down the overnight interest rate. This decline in the cost of credit to banks
increases the profitability of new loans to businesses and individuals and provides stronger
incentives for banks to expand the amount of credit to the economy.
A second monetary policy tool available to the Federal Reserve is the discount rate, the interest
rate the Fed charges on loans it makes to banks. By increasing or decreasing this rate, the Fed
can discourage or encourage banks to borrow the funds it creates and, therefore, make more
loans to the public.
A third way in which the Fed operates monetary policy is by regulating the proportion of liquid
reserves that banks must keep on hand. Obviously, the higher the reserve requirement, the less
there are funds available to make new loans.
:
appoint –
appointment –
authority – ,
available – ,
chairman –
charge – ()
confirm – ,
confirmation –
create –
designate – , , ,
discount – , ; ,
foster – , ,
independent –
insulate – ,
lend – ,
liquid –
overnight –
pressure –
principal – ,
profitability –
realize –
reserve – ; ;
Senate –
term –
board of governors –
policy-making –
key role –
vice chairman –
reserve funds –
short-term interest rates –
make loan – ,
profit margin – ,
attract deposits –
congressionally granted authority –
balance sheet –
relative to – ()
push down –
discount rate – ,
liquid reserves –
on hand –
reserve requirement –
Exercise 1
Answer the questions:
1. Since when has the Fed been the central bank of the United States?
2. What is the main purpose of the Fed?
3. What role does the American Senate play in the work of the Fed?
4. Why are the terms of the FED governors so long?
5. What does the FED do in order to regulate the amount of the nation's money supply?
6. What is the profit margin of the bank?
7. How does FED create money?
8. How can the interest rate be pushed down?
9. What is the discount rate?
10. How are the commercial banks' liquid reserves regulated?
1
A banker was about to get married. He went to the jewelers to get a wedding ring for his
fiancee. The jeweler told him that he can have the inside of the ring engraved with the name of
his fiancee for an additional $20.
He said, «But that will reduce the resale value!» The jeweler was aghast. He said, «How can
you say such a thing. You are a butcher!» «No,» replied the banker, «I am an banker».
2
A banker is someone who knows the price of everything and the value of nothing.
3