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Globalization and Taxation

Updated on November 8, 2016

You just got out of the cab that took over a half hour to haul. Finally, you’ve made it to your destination. The South Philly streets are flooded with people just trying to get a seat at their favorite spot on this busy Saturday night – it’s the end of restaurant week. It’s the best week in Philadelphia for you and your fellow foodies. The smell of the fresh Italian bread and the homemade gravy permeates the entire restaurant. But what sets your favorite restaurant apart from the rest? What makes it your favorite? There are many factors that go into this. Most of us don’t even think about these factors, especially the ones on a global scale. Globalization affects the smallest amount of things we appreciate everyday, without most of us even noticing. For example, that small restaurant in South Philadelphia is one of them. Today we will be examining how globalization affects taxation.

First off, authenticity is usually what makes people fall in love with certain restaurants. This sets restaurants apart from others and creates a competitive advantage. In order to obtain this authenticity, imports of Italian products have to be organized. This is where the globalization comes into play and affects the tax on the imports. We may be apart of the North American Free Trade Agreement, where there are no taxes on imports between Canada, Mexico, and us, but this doesn’t help us when trading with European countries. We are not apart of the European Union, which means we do have to deal with tariffs and quotas on imports. This is a barrier that globalization has created on its own.

Another way globalization has an impact on our taxes is just how the economy is doing in general. Globalization creates a huge competition for business when they go on a worldwide scale, because they are competing with not only the country, but also the entire world. Whenever there are multiple producers of goods and services competing for a hold on the economy that creates an increase in quality for these goods and services. With that, the economy increases. When the economy is doing well, taxes increase. On the other hand, when the economy is in a recession, taxes will decrease. This is another way globalization takes a hold on taxation.

In addition, a major globalization factor that contributes to taxation is immigration. Immigration can impact our taxes in more ways than just one. With an increasing population, part due to immigration, that means there are more taxes being collected. This goes both ways. There are illegal immigrants who do not pay taxes like American citizens do. This however does not disregard the costs they still create for the government. Immigration has the power to create an increase and decrease in taxes.

Lastly, the price of oil is also a global factor to consider especially when looking at taxes. The price fluctuation on oil is never reliable/steady. Fluctuation on the price oil is affected by many factors – one of them being transportation costs for imports. The process of getting the imports from over seas is affected by the global factor of oil price. If the transportation costs are too high, than it is less likely to be able to participate in trade for that period in time. It all depends on the price fluctuation for the effect on taxes.

These are only a few of the many global-related factors that affect taxation. Most of us don’t even realize the many impacts globalization puts on taxation. It affects us every single day. This relationship correlates with us being citizens of the United States. The taxes we pay as citizens? That is how it affects us. The price it takes for you to fill up your gas tank? The brand new school being build for your newborn to go to when they grow up? That is how it affects us. That is how it affects us. The small restaurant that you take for granted for take out all the time? That is how it affects us. We walk in, smell the aurora, and leave craving more. But what really goes into this success story of that restaurant that has consumers coming back for more; Globalization and taxation. Globalization is becoming faster, spreading wider, and affecting taxation more every single day. In my opinion, it is only going to be vaster, and most influenced as time goes on. This makes global factors like immigration, imports, etc. more prevalent to taxation in the future than ever before.


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