Impact of Legal System in Economics

This paper seeks to examine the economical effect, if any, upon what the legal system requires of business in America, from a sole proprietor, to a corporation. The paper will also have to look at the costs imposed on operating a business for obtaining a business license, advertising, filing fees paid to the State, and all such costs and within a State, City, and County.

Further, in order for a certain state to attain a continuous towering economy, the application of tax revenues and tax allotments must be taken sensitively in accordance not only with the benefit of the inhabitants of there area of jurisdiction but considering global matters as well (Dickinson, 2007). International relationships are important in raising a country’s currency, upon given with the fact that the “capital state” of economy is situated in America.

Hence, not only does such connotation on economics need to revolve solely around the vortex of revenue in the light of taxes, but it must also be capable enough in meeting the web of complications comprised by all the other forms of business which includes corporal, governmental, estate allocations and other forms of the like—if proven to be stable in all areas, it is then the only time that a state may be labeled as “sufficient” and economically stable. Analysis The conduct of any business in any part of the world is regulated by the government and therefore business activities are governed by laws locally and on the state level.

As to why the government imposes cost to conducting business is based on basically two state powers, which are the police power (Shah, 2005) and the power of taxation. In regulating the business entities and the latter are activities—the government has the best of intentions of promoting public welfare. Hence, under the local level of government, there can be imposed local permits fees and license fees that must be paid by business operators whenever these entities are sole proprietorship, partnership or corporations are to start in operating their business.

Since these fees are being imposed to recover the cost of government in allowing the conduct of business, such power of the state from local to national is being imposed by the exercise of police power of the state by the local level government. Being therefore cost of regulation, the amount of cost is rather fixed and rates may be more or less the same for the group of similar type of business industry. Police Power of the State Still pursuant to the police power of the state, the government enforces the laws of business and administers justice where business entities complain of violations of commercial laws.

To illustrate the point, business entities enter into contracts and in certain cases it could happen there could be refusal to comply with the obligations created out of contracts. The parties cannot put the law into their hands, thus there must be a court system that must settle the issues between both parties. One may therefore clearly see the relevance of the legal system which is part of doing business. Since legal system entails services rendered by government, it should not be a surprise when government courts require the payment of filing fees as cost of pursuing justice on the part of business entities.

It is evident enough that what one sows in the field, must contribute in the state. Power of Taxation But since government does not only interfere from the local level but also at state level, another form of charges are imposed under the state’s power of taxation. Since the power of taxation involves the revenue generating power of the government, the government (Goode, 1951) may impose several forms of taxes such as income taxes and value added tax.

Income tax (Schick, 2000) is a tax based on the financial earning capacity of the business entities, which may include sole proprietorship, partnership and corporation (Fische, 1998). Under this kind of taxation, the state is charging taxes on the basis of an assumed obligation of the taxpayer-entities to the state in return for the service given by the state to the business entities in the form of security and protection and other services by reason for its being a government that needs funds to defray its expenses.

Another form of taxation which may also be imposed by the local levels of government if provided in their city charters is Business Tax. This may take the form of sales tax or the more familiar business taxes. As distinguish from income taxation, business taxation, charges the taxpayer for having been given the privilege of operating a business. Such kind of taxes is normally based on the amount of gross receipts, or sales revenues as basis for output tax but subject to certain deductions for claims like input taxes to reduce the taxes payable to the government.