Chapter 2 - Chapter 2 Tax Policy issues: Standards for a...

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Chapter 2 Tax Policy issues: Standards for a good tax Tax Policy -Forces behind the design of the income tax Forces -Revenue needs: Our government is not raising enough money to stay above the deficit. -Economic considerations: People are using the lax law to better the economy. (EX. Giving people a reduction if you take out a mortgage.) -Political considerations: Over-withholding so that you get a reduction. -Administrative considerations: (IRS) Enforcer -Social considerations: Giving a benefit for giving charitable contributions. -Influence of the courts: These are to interpret the law. Standards -Include Sufficiency, Convenient, efficient, fair Sufficiency -Raise revenue: generate enough funds to pay for the public goods and services -Federal debt:: In 1970 it was 387 Billion in total debt compared to today it is about 7-8 Trillion -Budget Surplus: In 2000 232 Billion in surplus minus social security was 83 Billon net. -Change the base/increase rates: To fix the problem the government should change the base or increase rates. Changing the base would anything that makes more money. Including more people to pay taxes could do this. Taking away the mortgage deduction. -Income effect says if government raises the rate people will work harder to get the same after effect paycheck. This is doubtful people would by into that effect because they are
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This note was uploaded on 04/02/2008 for the course ACCT 4440 taught by Professor Stec-helsta during the Fall '07 term at Colorado.

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Chapter 2 - Chapter 2 Tax Policy issues: Standards for a...

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