The Constitution of the United States (US) was reviewed, and the Article 1 was chosen. From article one, the section chosen was Section 8 which defines the powers vested by the American Congress. This section defines the nature of working that Congress of US does. The Congress limits the activity of the business by imposing the taxes on the financial activities. By imposing taxes, the Congress makes sure that it generates enough revenues so that the social and other related services can be provided to the business (US Constitution, n.d.).
The Congress protects the interest of business. They do by giving the permissions to the business for doing their respective commerce activities in different states of America other than the state of origin Moreover, it also allows the business to grow as a multinational business empire. Along with protecting the work interests of the business, the Congress also provides protection to the business by creating a system of copyrights and patents for their creative works.
The above section of the law can be applied to the normal scenario. For example, a normal person living within his needs to borrow some money for conducting the business. Moreover, he needs some legal protection i.e. for the product he would innovate, and this product will be used in public so that the competitors do not imitate. This can only be done if the person has its patent that differentiate the product in the market. The Congress limits the creations of products in science and arts. In science, it limits the use of science for showing the promotional features of science and in arts only the useful or decent items can be marketed or copyrighted or patented.
The business owner personal tax planning can be beneficial for the business. It was a provision from Patient Protection and Affordable Care Act (PPACA) that took effect on 2013 (Parrish, 2013). In this regime, the tax imposed on investment income of individual, estate, and trusts was 3.8%.
If the tax rate is implemented on the income falling in the bracket of 39.6%, then this addition will raise the tax on income to 43%. And when it is applied on the capital gains it gives a quick rise in the returns to it. For example, if the investor is earning capital gains at a rate of 15% before; then the addition of the 3.8% surplus tax will increase the gains. This will directly impact the returns from 15% to 18.8% for individual and corporate level (Parrish, 2013). For the individual family, the tax income generated by the non-active members falls under net investment income (NII) and it is considered as a passive income that will be levying low taxes. For business owners, if the decision to sell the business is made by them, then the 3.8% surplus will apply to the capital gains they earn by selling out the business. For example, if the business owner sells the business, then the focus of additional 3.8% tax will be applied on the 20% tax earned. Thus, it will change the capital gains making the total tax rate of 24%.
It will raise the revenue earned by the higher tax payers, but the lower taxpayers will be excluded.
This will reduce the tax avoidance by the wealthier persons, but it will create for them too as they will now hesitate to sell the assets.
High inflations rate can cause a higher capital gains but going for the correction of it will cost a hefty amount to be paid.
Parrish, S. (2013). Is The 3.8% Medicare Surtax A Big Deal? Yes. Forbes, Retrieved July 15, 2015 from: http://www.forbes.com/sites/steveparrish/2013/06/25/is-the-3-8-medicare-surtax-a-big-deal-yes/
US Constitution. (n.d.). The Constitution of the United States. Retrieved July 15, 2015 from: https://www.usconstitution.net/const.pdf