Text Notes Ch 1 - An Overview of Federal Taxation

Text Notes Ch 1 - An Overview of Federal Taxation - Text...

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A good tax ought to be equitable i. Tax base - amount up which tax levied - income tax is taxable income -> total income less exclusions, deduct & exemptions. Income - permanent increment to wealth. Exclusion - increments of wealth not included in tax base. Deducting - reduction in gross amount that must be included in taxable base Tax rate - % applies to tax base to determine taxpayers liability. Usually proportional or progressive. Tax = Tax Base x Rate ii. Designing Tax Systems a. Incomes Taxes: Federal and most sates (include pg 1-12) i. Created because scope of govrn grew & needed source of rev to supplement tariff system - under constitution any direct tax imposed by congress was required to be apportioned among the sates on basis of relative pop - under that system fed tax rates would be different from state to state. First income tax 1861 to finance exp from civil war. Springer v US - citizen challenged tax, claimed unconstitutional because it was direct and not apportioned. Direct tax cannot be avoided - head tax & prop tax considered direct. Indirect - customs duties & excise taxes. Tax expired 1872, reenacted in 1894 - Polluck v Farmers Loan & Trust co focused on income tax as it applies to real estate. 1909 corporate income tax upheld by supreme court in Flint b Stone Tracy co . Also in 1909 congress proposed amendment to constituent that would allow levy tax on all income w/o apportionment - sixteenth amendment passed 02/25/1913 " congress shall have pwr to lay & collect taxes on income from whatever source derived, w/o apportionment among the several states & w/o regard to any census or enumeration" Rev act 1913 on 10/03/1913 & made retroactive to 03/01/1913. Today's governing federal tax law is Internal Revenue Code of 1986. ii. iii. In Fed govrn only income tax claim a dominant role in providing funds for operation iv. Pay wages of 1500 or more during quarter of who employ someone for 20 day during year
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This note was uploaded on 09/08/2010 for the course BUS 123A at San Jose State University .

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Text Notes Ch 1 - An Overview of Federal Taxation - Text...

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