In my assignment, I focused on tax arbitration, specifically on how to combine different instruments for paying labor costs to maximize an individual’s net earnings at the same gross cost. I first introduced income tax, who is eligible to pay it, and how the amount of income tax is calculated. I presented tax reliefs related to regular salary, holiday bonuses, and performance-related pay, and through various simulations, demonstrated how varying the payment of bonuses and performance pay can help an individual receive the highest possible share of their gross salary as net pay, while also potentially reducing the employer’s cost of employment. In the second half of the assignment, I focused on international tax comparison, showing the proportion of GDP represented by tax revenues in European OECD member countries. I also introduced the concept of the tax wedge and used 2023 data to present the amount and structure of the tax wedge in European OECD member countries. In the chapter on young people and income tax, I explained how income tax applies to students. I also showed how advance payments work and how young people can avoid them, the tax reliefs they can benefit from, and how to optimize the selection of reliefs they will claim.
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