Principles of Tax Policy
Author:
McMahon, Stephanie Hunter
Edition:
3rd
Copyright Date:
2023
30 chapters
have results for tax
Chapter 9. Gift and Estate Taxation 138 results (showing 5 best matches)
- The gift tax on intervivos transfers, a fancy way of saying transfers during a donor’s life, is currently taxed at a top rate of 40%. Although the gift tax, like the estate tax, is structured as a progressive tax so that smaller gifts are taxed at lower rates, the unified tax credit offsets the taxes owed at lower rates. Therefore, the gift tax and estate tax effectively have flat 40% rates.
- There is significantly less political debate over the gift tax than the estate tax, possibly because so few gifts are taxed. In 2020, of 174,026 gift tax returns filed, only 516 were taxable. It is also possible that the gift tax is seen as part of the estate tax so that policymakers referring to the estate tax assume it includes the gift tax. If so, the assumption is incorrect. Despite the link created by the unified credit and tax rates, the gift tax is a separate tax. When the estate tax was repealed in 2010 for the year, the gift tax was retained.
- Operationally, the gift tax is cumulative, and its rate is tax exclusive. The first rule means that for determining whether a particular gift is taxable, all prior taxable gifts are added together, and the current year’s tax depends on whether prior taxable gifts pushed the donor past the credit. That gift taxes are tax exclusive means that the tax is not included in the base but, instead, are calculated on the amount a recipient receives. For example, if a donor gives $10,000 and is subject to a 50% gift tax, the gift tax is $5,000 and the total gift with tax would cost the donor $15,000. Under a tax inclusive rate, like used in the estate tax, if the transfer is to cost the donor $15,000, the tax owed is $7,500, or the total cost including the tax times 50%. Thus, a gift tax’s effective rate, as the tax owed divided by the total cost, is 33% compared to the true 50% rate for the estate tax. Similarly, with the 50% gift tax the recipient receives $10,000 whereas with the 50% estate
- The federal estate tax applies to transfers of property, including cash, at a person’s death. The top marginal estate tax rate is 40%, but the estate tax is nominally structured as a progressive tax, like the income tax, so that the first $10,000 is taxed at 18%. However, Congress enacted a tax credit that offsets any estate tax owed at the lower rates, so the rate is effectively a flat 40% for those estates that are taxed. In 2018, Congress more than doubled 2017 credits through 2025, and, in 2022, the estate tax only applies to estates of greater value than $12.06 million for single taxpayers and $24.12 million for married couples, and those thresholds apply after excluding statutorily favored transfers. In 2020, the Tax Policy Center estimated that the effective federal estate tax rate for the 1,275 estates subject to the tax was 14.7%; and historically the highest effective rate was in 2004 at 21.8%.
- The estate tax rate is tax inclusive, which means that the amount paid in tax is included in the calculation of the taxes owed. In this way the estate tax resembles the income tax but not the gift or sales taxes. The result is increased revenue at a particular rate. For example, if Charlie dies and his taxable estate above the credit is $100,000 and is subject to the 40% estate tax, Charlie pays $40,000 of tax to the government. In this hypothetical situation, $60,000 plus the amount below the credit is left for the beneficiaries of the estate, and the estate’s effective tax rate is less than 40%.
- Open Chapter
Chapter 4. Standards to Judge the Tax System 104 results (showing 5 best matches)
- Finally, a move to a flat rate tax should not be considered in isolation but as part of a complex tax system. A flat rate income tax is only one of many taxes that taxpayers face. Some other components of the system are likely regressive, such as federal employment taxes and state and local taxes. Therefore, adding a flat rate income tax might exacerbate the regressivity of the system as a whole.
- Even if a tax statute names a particular taxpayer to be liable for a tax, that naming does not guarantee that the taxpayer is ultimately liable for the tax. The person ultimately responsible can be the person who pays the tax directly or some other person who pays the tax indirectly. In tax policy lingo, the incidence of a tax is the person who bears a tax’s burden. For example, if a tax is imposed on car manufacturers but manufacturers are able to raise prices to offset the cost of the tax, the tax is passed on to consumers who pay the tax in the form of more expensive cars. In this example, the tax is shifted from the person who is nominally responsible for the tax, the manufacturer, to the consumer who bears the burden of the tax. Thus, just because a person remits a tax payment to the government does not mean that the payment reduces that person’s wealth or consumption.
- Few flat tax proposals are fully developed and, therefore, most do not answer the countless questions necessary to put a tax regime into operation. One difficulty is defining the income against which the flat rate is to be applied. Under the U.S.’s existing tax regime, gross income is offset by deductions. Proponents of flat taxes have to decide whether they will retain the deduction-based system but doing so is not without complexity and political risk. To achieve simplicity and keep rates low, advocates of the flat tax may support a broader gross tax as opposed to a net tax. A gross tax, unlike a net tax, does not permit deductions. Eliminating deductions is often expected to reduce existing political pressure around tax incentives and to reduce tax planning by taxpayers seeking to maximize their deductions.
- A reason economists urge this latter form of efficiency is because it is impossible to predict exactly how people will respond to taxes. Economists describe responses as the substitution effect or the income effect but cannot quantify either . The substitution effect results when people change their behavior to adopt a low-taxed activity and give up a preferred high-tax activity. For example, instead of working and paying employment and income taxes on earnings, a person might substitute a low-tax activity like leisure. Alternatively, the income effect results when people react to taxes by increasing the taxed activity to produce the same after-tax result. For example, a person might increase overtime work when tax rates rise if the person wants to raise a targeted amount of income to pay for a child’s private school.
- Optimal tax theory attempts to design a tax that minimizes its distortion of market choices. A neutral tax avoids distortion completely so an optimal tax is completely neutral. But what is neutral in this context sometimes produces unusual results. For example, because taxes discourage the taxed activity, progressive rates may discourage a taxpayer from working at her optimal production level. As the taxpayer earns more income, a greater percentage goes to taxes even as she is more likely to choose leisure for the substitution effect. A regressive tax in which rates go down with more income might offset this effect. Therefore, regressive taxes might be optimal.
- Open Chapter
Chapter 5. Tax Planning 116 results (showing 5 best matches)
- All that is required for something to constitute tax planning is for taxpayers to consider the tax consequences of their choices. Therefore, not all tax planning is unlawful; the federal government even encourages some tax planning. For example, when taxpayers choose to save for retirement through tax-advantaged plans, they are engaging in government-encouraged tax planning. This tax planning is tax avoidance, but tax avoidance that is considered socially useful. However, some tax planning goes beyond what the law permits and beyond what is merely tax avoidance. Tax evasion is illegal tax planning. Thus, it is tax evasion that is subject to financial penalties and possibly criminal sanctions whereas tax avoidance is not punishable under the law.
- The term tax shelter is like tax planning in that it can constitute tax avoidance or tax evasion. Tax shelters are any method of reducing payments to tax collecting entities. Thus, tax shelters can minimize federal, state, or local taxes. They can work by decreasing gross income, increasing deductions or tax credits, or changing the timing of income. Tax shelters can be legitimate or illegitimate, legal or illegal. Only legal shelters and legal planning are tax avoidance; if shelters cross the line to illegal planning their use becomes tax evasion.
- Lawful tax planning is tax avoidance, and the amount of money saved from tax is not included in the tax gap. It is often hard to measure tax avoidance as the activity tends to be discrete or even hidden. Nevertheless, classification as tax avoidance rather than tax evasion is important. At times tax avoidance is recognized as beneficial and, at others, is discouraged as wasteful. Although taxpayers have the right to engage in lawful tax avoidance, Congress can choose to limit the benefits of particular forms of tax avoidance by enacting statutory responses, in which case continuing the behavior and claiming the benefits would constitute tax evasion.
- Because there is no natural law of taxation, statute determines what is taxed, and tax evasion is simply what the statute does not permit to reduce taxes. Therefore, tax evasion is the unlawful mitigation of taxes. Tax evasion occurs when taxpayers fail to file tax returns or deliberately misrepresent their income, deductions, or credits to reduce their tax liability. The latter offense may include dishonest tax reporting, such as overstating deductions or declaring less income, profits, or gains than the amounts actually earned. Taxpayers may buy into tax shelters to bolster their case for the tax reduction by creating a paper trail for the evasion even though the paper trail does not work as the taxpayer hopes.
- There is no measure of lawful tax avoidance because it is such a broad concept. On the other hand, government studies estimate the revenue cost of tax evasion. In the years between 2011 and 2013, the annual gross tax gap—the gap between the amount taxpayers lawfully owed in taxes and what they paid—was $441 billion. gap is more than 150% of the amount raised by the corporate income tax. The net tax gap, which includes revenue collected after late payments and enforced collection, was $381 billion. Because of the size of the U.S. economy and its manner of recording evasion, American tax evasion is a large number; however, of one study comparing nations’ tax gap against their GDP, of thirty-five developed countries, the U.S. had the ninth lowest share of tax evasion.
- Open Chapter
Chapter 8. Consumption Taxation 111 results (showing 5 best matches)
- The tax base not only determines what is subject to tax, its size determines the tax rates necessary to fund government spending. The larger the tax base the lower the tax rate required to raise a given amount of revenue. For example, if the tax base (or what is subject to tax) is $12,000 and is subject to tax at 50%, the tax raises $6,000 in revenue. If the tax base is increased to $15,000, the same 50% tax raises $7,500 in taxes. And to raise $6,000 with the larger tax base, the rate can be reduced to 40%. Thus, all else being equal the smaller tax base for a consumption tax results in higher rates and, consequently, a larger amount of money spent on consumption being paid to the government.
- To be clear, an increase in nominal rates would not necessarily be an increase in the amount that is paid to the government. Much of the rate increase necessary for a consumption tax is optical. First, the higher rates needed because of the smaller base, and, second, most consumption taxes are tax-exclusive rather than tax-inclusive. A tax-exclusive tax is calculated on a base that does not include the taxes paid. For example, if a $100 item has a 50% sales tax (a large percentage only to highlight the issue), the tax is imposed on the $100 and the final cost is $150. This 50% consumption tax would raise $50 in taxes. A tax-inclusive amount includes the amount paid in tax in calculating the tax rate. For example, if Congress wants $150 of income to pay $50 in taxes, the rate would be only 33%. The 33% income tax rate times the $150, produces the $50 in tax. Thus, a tax-inclusive rate is always a lower number than a tax-exclusive rate even when the economic result is the same.
- Depending on the relative amount of imports versus exports, consumption taxes could increase the tax base for businesses. If the U.S. were to export more than it imports, the tax base would be smaller than it would be under an income tax, which would also tax profits from exports. Alternatively, if the U.S. were to import more than it exported, the tax base would be larger, possibly yielding more government revenue. Under an income tax, only the final retailer’s profits are taxed whereas the full sales price can be taxed under a consumption tax. Of course, that increase would depend upon the structure of the consumption tax. In a world of both imports and exports, that most of the U.S.’s international tax treaties are framed for the income tax, and not a consumption tax, would necessitate significant and swift government action to mitigate double taxation of consumption.
- In early American history, most taxes were levied on consumption, such as stamp taxes, whiskey taxes, and taxes on tea. Early policymakers favored consumption taxes because they thought it was harder to raise consumption tax rates to confiscatory levels, however that is defined, because they are visible taxes. Despite early support for consumption taxes, the trend has been away from such taxes since the adoption of the modern income tax in 1913. Nevertheless, there have been repeated calls for new consumption taxes, both at the state and federal level. Some calls are for national sales taxes and others for value-added taxes (popularly referred to as VATs). The proposals take many forms because there is no one model for consumption taxes. Not only do rates change among proposals, so do the items subject to the tax, who pays the tax to the government, and the items excluded from taxation.
- By only taxing items that are consumed, a consumption tax redefines the proper base to be taxed from the income tax. Unless no one saves anything, a consumption tax has a smaller amount subject to tax than taxing all of the income that taxpayers earn. How much the tax base is smaller depends upon the amount of savings and the structure of the income tax because Congress has already carved some forms of savings out of the income tax, such as with 401(k) plans and IRAs. These provisions make the modern income tax operate similar to a consumption tax. The inverse is not true in that a consumption tax can never reach all forms of income.
- Open Chapter
Chapter 13. State and Local Governments 88 results (showing 5 best matches)
- Forty-three states impose individual income taxes, and all but two states report revenue from a corporate income tax, franchise tax, or gross receipts tax, although the latter could be classified as a type of sales tax. These state individual income taxes are a major source of revenue for the states that impose them, approximately 23% of revenue from taxes. Additionally, corporate income taxes raised about 3% of state and local governments’ tax revenue. Although even as taxes on income, no two states impose exactly the same tax. Instead, there is tremendous variety in how states implement their income taxes.
- All fifty states impose property taxes. In 2020, states and localities collected almost $600 billion in property taxes, most of it at Property taxes made up approximately 32% of state and local tax revenues in 2020, even more when focused only on local governments for which they were approximately 72%. Despite property taxes’ importance, their tax burden as a share of income fell from 11.7% in 1977 to 10.3% in 2019. As for particular states, New Hampshire has the highest dependency on property taxes at 64% of its tax revenue and was one of only two states over 50%, whereas three states (Alabama, Delaware, and New Mexico) had less than 20% of their state and local tax revenue from property taxes. Most of the tax’s revenue comes from real property, such as land, office buildings, and housing. Nevertheless, most states also tax at reduced rates personal property, such as machinery, furniture (often limited to that used in business), and business supplies. Thus, property taxes apply to...
- What is taxed in states with a general sales tax also varies. Only thirteen states tax food sales, but four of those states allow a rebate or an income tax credit to offset the burden on poor households. Six states tax food at a lower rate than other goods, and the remaining thirty-two states exempt food completely. Three localities in states that exempt food impose their own, local level tax. Some states also apply the sales tax to services; however, taxed services are frequently limited to event admissions, utilities, and lodging.
- As a corollary to the sales tax, all states that impose a sales tax have a complimentary use tax that is intended to address out of state purchases. A use tax is imposed on residents when a resident makes purchases in states that do not impose a sales tax at least as high as that applied in the consumer’s home state. For example, Ohio taxpayers are obligated to pay a use tax on items purchased out of state in locations that impose a lower sales tax than that imposed by Ohio. Most use taxes, including Ohio’s, are collected via the consumer’s state income tax return. However, compliance with, and enforcement of, use taxes are notoriously poor. One study from the University of Cincinnati found that in 2010 less than 1% of state income tax returns included the use tax.
- State and local governments collect their own taxes; and the three biggest sources of state and local tax revenue are property taxes, income taxes, and sales taxes. In 2018, state and local governments raised approximately $2.6 trillion. To aid their revenue-raising, the federal government indirectly subsidizes these taxes. As of 2018, property taxes plus either a state and local income or sales tax up to a $10,000 cap is deductible against the federal income tax. In addition, the federal government makes direct payments to state and local governments. From their revenues, states and localities provide significant services for their residents. Also in 2018, as a group, state and local governments spent approximately $2.8 trillion, but the amount of tax revenue raised locally and the choice of services vary greatly among the states.
- Open Chapter
Chapter 17. Incentives and Disincentives 149 results (showing 5 best matches)
- The increased use of tax incentives has changed how many people pay taxes and what taxes people pay. In 2021, the Tax Policy Center reported that less than 43% of American households paid income taxes. This frames the issue around the payment of tax and ignores the expansion of social spending, such as the ETIC and the child tax credit, through the tax system. In other words, a larger percentage would pay income tax but for having these taxes reduced to $0 because of tax incentives. The statement also ignores the payment of other federal taxes. As Congress increases the use of social welfare and economic stimulus policies through the income tax system, we should expect to see a smaller percentage of income taxpayers but a possible expansion of other tax burdens.
- Much like tax loopholes, what constitutes a tax incentive is in the eye of the beholder. Thus, although a broad conceptual sense of tax incentives is relatively easy to grasp, creating a list is difficult. The difficulty stems, in large part, from the lack of a generally accepted baseline against which incentives should be measured. On one hand, if the baseline is a comprehensive definition of income (such as the original Haig-Simons definition), anything not required for a net income tax is a tax incentive. Therefore, deductions for 401(k) savings plans and child tax credits are tax incentives. On the other hand, if the proper baseline is a consumption tax, 401(k) deductions are not incentives but make the income tax more consumption-based; child tax credits would still be incentives. Thus, the baseline is critical to determining whether something is properly viewed as a tax incentive.
- It is a necessary consequence of tax preferences that non-preferred items or activities are relatively more heavily taxed. This lack of preference is, in effect, a penalty for not being something Congress prefers. Additionally, there are more explicit deterrents in the tax system. These occur when Congress uses the tax system to punish behavior. These punishments remain relatively rare but are likely to grow as more social policies are deployed through the tax system. This chapter focuses on three specific tax penalties: the healthcare mandate, sin taxes, and carbon taxes. These taxes are to discourage taxed behavior and, in some cases, to encourage alternative behavior. To date, the cost of relative tax burdens is not quantified.
- “Sin taxes” are excise taxes that operate like a selective sales tax. These taxes are often levied on commodities, such as tobacco and alcohol, or activities, such as gambling. As the name implies, sin taxes are imposed on things that at the time the tax was enacted were objects of widespread disapproval. These targeted taxes continue to be tolerated because a large enough portion of the population still feels there is something immoral or bad about the items themselves. Thus, as all taxes operate as a disincentive to engage in the taxed behavior, sin taxes are to decrease the sinful behavior.
- Despite the difficulty of defining tax incentives, a federal list is maintained. In 1968, Stanley Surrey as the first Assistant Secretary of Tax Policy laid the groundwork for the Tax Expenditure Budget when his book convinced many policymakers that anything funded with a tax incentive could be funded directly. When establishing the tax expenditure budget, Congress adopted the term “tax expenditures” as deviations from the “normal income tax.” However, the plan did not define a normal income tax. Despite this omission, the budget moved Congress towards equating tax funding with appropriations.
- Open Chapter
Chapter 2. How Tax Law Is Enforced 123 results (showing 5 best matches)
- In the determination of a tax liability, the IRS has extraordinary powers backing up what is generally thought of as a voluntary system. These powers make it only partially accurate to say that taxpayers’ annual tax returns calculate their taxes or that paying taxes is voluntary. The IRS has the authority to contest the tax return and to demand taxes that are neither paid nor reported.
- Another factor in how people respond to taxes depends on how aware they are of the tax or how salient the tax is. Salience is the state of being prominent or noticeable. The more salient a tax is the more taxpayers are aware of the tax. Only if a tax is salient will taxpayers adjust their demand of the taxed activity in response to changes in the after-tax price. For example, Professor Raj Chetty and his coauthors performed an experiment in a grocery store and, without changing the applicable tax, found that posting signs of the post-sales tax cost reduced demand by 8%. Even when people correctly identified their local sales tax without the sign, the posting changed their behavior by making the tax more salient.
- In an ideal tax system, the government might assess tax liabilities based on what each person could afford to pay calculated according to some metric the American people all accept. This type of system might allow consideration of personal factors that are not recognized in our modern tax system. Instead, the federal government creates a generally applicable tax system. In this system, the assessment of tax, which is the legal creation of a tax liability, ignores many personal factors that might affect a taxpayer’s ability to pay taxes. It is only in the collection of taxes that the government permits consideration of an individual’s situation. This raises questions whether the imposition of tax should allow more individualized consideration and whether tax collection should be more automatic.
- Tax litigation is also unusual because of the number of possible forums: the Tax Court, the appropriate District Court, the Court of Federal Claims, and, at times, the Bankruptcy Court. Taxpayers choose their forum based on many factors. One factor is the requirement to prepay the taxes due in order to litigate for a refund in the District Court or the Court of Federal Claims. A taxpayer is able to challenge assessments in the Tax Court without prepaying the liability. Tax issues also arise in bankruptcy litigation but only if the taxpayer is in bankruptcy. Second, Tax Court judges have more specialized tax knowledge and can hear cases earlier in the process because Congress granted the Tax Court specific jurisdiction to hear cases earlier in the assessment-collection process. Studies show that more than 90% of tax litigation, with an aggregate tax deficiency of $4.66 billion, occurs in the specialized Tax Court.
- The Treasury Department comprises bureaus and offices: bureaus are assigned specific tasks, and offices are responsible for specific policy areas. The Treasury Department delegates to the Office of Tax Policy (OTP), headed by the Assistant Secretary of Tax Policy, who in 2022 is Lily Batchelder, the job of crafting the executive’s tax policy; and the Assistant Secretary reports directly to the Secretary. Consequently, it is the Assistant Secretary of Tax Policy and the OTP that creates the president’s tax plan that is submitted to Congress in the process of developing the budget.
- Open Chapter
Chapter 6. Economic Theory 57 results (showing 5 best matches)
- Taxes add complexity to this analysis, but taxes do not fundamentally change what the diagrams depict. Taxes are a cost of buying or selling goods that can affect either supply or demand by changing prices. The impact depends upon how the taxes are structured. Comparing how equilibrium prices are changed by taxes illustrates a more complete picture of tax policies.
- How the tax is structured determines whether the tax adjusts the supply curve or the demand curve. Nevertheless, these diagrams show that if the tax affects parties symmetrically it does not matter who the tax is imposed on, the results are similar. In other words, the amount of the surpluses and the government revenue is the same regardless of whom the statute taxes if supply and demand react equally to the tax, although differences exist if the taxed party internalizes some or all of the tax.
- Optimal tax theory is the study of which tax features reduce inefficiency and distortion in the market under the given economic constraints. Therefore, optimal tax theory seeks the best tax to reduce or eliminate a particular market failure. Focusing on efficiency in the sense that taxes should not cause distortion, optimal tax theory looks for the most neutral tax regime. The result is generally higher taxes on inelastic goods and lower taxes on elastic ones. Although an interesting theory, there remains no definitive answer as to what is the optimal tax regime for any given failure.
- That taxes reduce most investments’ ROI does not mean the reduction is the same for all investments. Because taxes are not uniformly imposed on all investments, their impact on ROI frequently differs. Therefore, ignoring taxes produces a false sense of higher returns and makes for inaccurate comparisons. Some investments are tax preferred, meaning that taxpayers can either deduct the initial investment or claim distributions without tax. Additionally, there are multiple levels and types of taxes that might impact investments differently. This could make comparing post-tax ROI complicated. It is important to know whether an investment is pre- or post-tax and whether the accumulation is subject to tax. Only the returns calculated after applying all taxes represent a real increase in value.
- If the seller has to pay the tax, such as with a value-added tax, the tax increases the seller’s reservation price. By raising sellers’ reservation prices, the supply curve shifts upward so that the same goods are offered at a higher price. For example, in the diagram below the $3 tax shifts the supply curve up by $2. The amount that the tax affects the supply curve depends upon the extent to which the seller is willing to internalize the cost of the tax as opposed to passing it on to consumers. In this example, the seller pays $1 of the tax himself by reducing his profits but passes on $2 to the consumer by increasing the price. Thus, the equilibrium point is not always adjusted by the face value of the tax.
- Open Chapter
Chapter 7. Income Taxation 144 results (showing 5 best matches)
- The individual and corporate taxes that have evolved into the largest source of federal revenue initially raised relatively little in tax at a time when the government spent relatively little. The 1909 corporate income tax was a 1% tax on corporate income above $5,000, but in 1913 the exemption was removed for several years, so that the tax applied to all of a corporation’s net income. The 1913 individual income tax was a mildly progressive tax with rates ranging from 1% to 7%, and it applied to less than 2% of the labor force. Although both taxes were adapted to raise more revenue in World War I, the biggest changes to the taxes were made in World War II. For example, in World War II, the individual income tax became a mass tax, meaning that it applied for the first time to the large middle class.
- A fundamental issue for any income tax system is whether the tax system will tax all income, including accumulation and consumption, or only part of this total. An income tax can tax both parts while a consumption tax only taxes part. A policymaker’s preference depends on the standard the policymaker uses to judge taxes. If the policymaker believes taxpayers should only pay to the extent they directly benefit from the government, accumulation and dis-accumulation should not be taxed. Alternatively, if the policymaker wants to tax according to taxpayers’ ability to pay, accumulation or dis-accumulation is an important factor. Today, the U.S. tax system does not take a pure approach but, instead, defers tax on accumulation.
- One argument made for the estate tax is that, because appreciation is not taxed under the income tax, the estate tax ensures there is no leakage from the tax system. For more on the estate tax, see Chapter 9.04.
- The individual and corporate income taxes both tax net income. Therefore, the tax base or what is taxed is only an increase in income as opposed to all earnings, all transactions, or overall wealth. Although a simple concept, significant complexity arises from taxing this base. Chapter 7.01 defines the structure of the income tax, or how the tax defines the tax base. This discussion is intended to provide the details necessary for a discussion of their policy implications; more detailed discussions can be found in books devoted to the income tax. Important policy choices for this tax base are discussed in Chapters 7.02 and 7.03.
- On rehearing, the court changed its mind. Instead, the court agreed that the ability to tax this compensation was within Congress’s Article I, section 8 taxing power because the tax is not a direct tax and is imposed uniformly. The court concluded that Congress may not make a thing income when it is not income but it can tax income that has a different label.
- Open Chapter
Chapter 11. Taxation of Businesses 147 results (showing 5 best matches)
- Notwithstanding declining rates, over the last decade the corporate income tax has raised between 6% and 11% of federal tax revenues, although at its height in 1943 it raised 40%. In 2021, the corporate income tax yielded approximately $372 billion, the largest absolute amount ever. The corporate income tax yields relatively little compared to the individual income tax, which yielded between 46% and 51% of federal revenue throughout the decade. However, the difference is the result of congressional politics rather than the limits of the tax’s capacity. Before 1941, the corporate income tax often produced more revenue than the individual income tax and, before 1968, raised more than payroll taxes (the latter recently tending between 33% and 38% of federal revenue). Corporate tax rates and the tax’s reach have been reduced as other taxes have been increased.
- Differences between corporate and individual income tax rates have sometimes encouraged, and other times discouraged, use of the corporate form. At times the corporate tax rate has been higher and other times lower than the individual income tax rate, often without Congress commenting on the disparity as it changes one or the other’s rates. There is also no connection between a corporation’s tax rate and the tax rates of its shareholders. There can be low-tax shareholders of a high-tax corporation or high-tax shareholders of a low-tax corporation. This lack of connection in rates can create incentives to shift money into and out of corporations.
- Finally, eliminating the corporate income tax may exacerbate the lock-in effect trapping wealth in corporate form. If income accumulates in a corporation without a corporate tax but is subject to tax on distribution, there is little desire to make distributions. One means of addressing this lock-in is a separate tax to encourage distributions, such as the accumulated earnings tax. These taxes are often more complicated than the corporate income tax. For many businesses, accumulated earnings taxes operate as an additional layer of tax because of legitimate business needs to retain earnings.
- The corporate-level income tax is an excise tax on the privilege of doing business in corporate form. Until 2018, the statutory corporate income tax had mildly progressive rates from 15% to 35% with an additional tax that eliminated the lower rates for high-income corporations, but, as of 2018, the tax is a flat tax at 21%. Unlike the 2017 changes to individual tax rates that are set to expire after 2025, this rate change was structured as a permanent change, partly because a permanent corporate rate cut was less expensive than a permanent individual rate cut. The temporary change to individual tax rates cost $1.2 trillion whereas the permanent change to the corporate tax rate cost $1.3 trillion. In addition, it is often politically difficult to win corporate tax rate reduction, so politicians might have preferred to make this change permanent for fear of renewed debate in eight years.
- Until the 2018 change, the top marginal corporate income tax rate had been static for the prior two decades, unsurprising considering the tax’s relatively stable rates. A 1% corporate income tax was enacted in 1909, four years before the individual income tax, and by 1986 the top marginal corporate rate had crossed 50%, largely in response to the Cold War and wartime revenue need. The rate was cut during the Reagan administration, as were individual income taxes. Since 1986, the top marginal corporate income tax rate was 34% or 35%, until replaced by a 21% tax in 2018.
- Open Chapter
Chapter 12. International Taxation 128 results (showing 5 best matches)
- The foreign tax credit offers a complete offset for the taxes paid to another country; a smaller offset is provided if a country offers a tax deduction for taxes paid to another jurisdiction instead of a credit. If Country A offers a deduction for the taxes paid to Country B, $10 is still paid to Country B but Country A reduces the amount of income subject to tax by $10. Therefore, Country A subjects $190 (rather than $200) to its 50% tax rate, so $95 is owed in tax. MNC Inc. pays a total of $105 in taxes, and MNC Inc. retains $95 after taxes. With the deduction rather than the credit, $5 less is available to MNC Inc. after taxes.
- Under these facts, Country B would impose $10 in taxes on the $100 earned in that country. With repatriation of the remaining $90, Country A would tax all $200 worldwide income times its 50% rate, or $100, minus a $10 credit for taxes paid to Country B, for a total tax paid to Country A of $90. Therefore, MNC Inc. pays a total of $100 in taxes, retaining $100 in after-tax income. With repatriation, the government of Country B receives its full amount of tax and Country A receives the excess as though its higher rate were imposed globally.
- As compared to worldwide taxation, a territorial tax regime taxes only the income earned in the taxing country. Therefore, income earned in foreign countries is left to be taxed, or not, by foreign jurisdictions. Put simplistically, a territorial regime divides the world into fiefs where each country is able to tax the transactions that go on within its borders. Some have argued that governments have no right know about, much less to tax, what a corporation does outside their borders. However, no advanced country operates a pure territorial tax system but, instead, operates a hybrid with features of worldwide taxation.
- For example, MNC Inc. has its headquarters in Country A, a country with pure territorial taxation. Country A has a 50% tax rate and in which MNC Inc. earns $100. MNC Inc. also earns $100 in Country B, and Country B has a 10% tax rate. After paying tax in Country B, MNC Inc. has $90 of post-tax income in Country B. That income is not taxable in Country A, which taxes only the $100 earned in Country A. Therefore, MNC Inc. owes $10 of tax to Country B and $50 of tax to Country A, for a total of $60 in tax. This leaves $140 in post-tax income. These tax results do not change whether or not MNC Inc. repatriates the income earned in Country B to Country A.
- When applying the U.S. foreign tax credit system, the same rules apply for individuals and businesses and for residents and nonresidents. Source is determined for each item of income, and expenses and deductions are allocated to the income. If the foreign taxes of the country where the income is sourced is greater than the U.S.’s tax on the income, U.S. liability is offset. However, if the U.S. tax is greater than the foreign tax, U.S. businesses owe residual tax to the U.S. government on their foreign earnings equal to the difference. Although a good approximation, foreign tax credits do not always offset perfectly, resulting in some limited amount of double taxation. Nevertheless, with the U.S.’s tax credit system for taxes paid to source countries, the real cost of worldwide taxation to U.S. taxpayers has been (1) the system’s complexity and (2) their inability to profit from low-tax jurisdictions.
- Open Chapter
Chapter 14. Charitable Organizations 105 results (showing 5 best matches)
- All tax exemption means is that an entity does not pay tax on its taxable income, or its gross income minus its deductions. Many types of entities may be tax-exempt, and their tax treatment does not depend upon the tax treatment of their donors. The tax treatment of donors does, however, depend upon the classification of the entity because only some tax-exempts entitle donors to deductions for contributions. Therefore, it is important to know where a particular entity fits within the rubric of tax-exempt status.
- As a deduction rather than a tax credit, the charitable donation deduction should be worth more to taxpayers in higher tax brackets. First, deductions offer greater tax reduction for higher tax brackets. For example, a $100 deduction to a taxpayer in a 25% tax bracket is worth $25 but to a taxpayer in a 10% tax bracket is worth only $10. Second, those claiming the standard deduction receive at most a $300 deduction.
- Congress has long been concerned that tax-exempt entities can produce goods or services that compete with tax-paying businesses. At issue is whether this competition is unfair in some sense. All else being equal, tax-exempts have greater capacity for predatory pricing because taxes are not included in their costs. Therefore, tax-exempts can sell at a lower price than businesses that have to pay taxes. However, this reasoning ignores that tax-exempts are choosing among investments for which all returns are exempt from tax, and tax-exempts have little incentive to engage in price-cutting. A tax-exempt could charge the same as a tax-paying business and retain the profits for its tax-exempt activities.
- UBI is generally taxed at corporate income tax rates, except for certain tax-exempt trusts that are taxed at trust rates. In 2015, 35,000 tax-exempts paid tax on UBI and another 28,000 organizations filed the requisite form but had offsetting deductions and so owed no tax. Almost half of these entities were 501(c)(3) charities. They reported over $348 million in tax. In 2007, an intensive audit of 34 universities found an additional $90 million in UBIT, with 70% of their returns being adjusted.
- Consider a $1 million investment that is being considered by a tax-exempt and a for-profit. The tax-exempt has a 0% tax rate and the for-profit has a 35% tax rate. If the investment generates $100,000 each year, the tax-exempt would retain it all and the for-profit would retain $65,000 after tax. Thus, the investment generates a 10% return for the tax-exempt and a 6.5% return for the for-profit. Although this appears to favor the tax-exempt, this investment must be compared to alternate investments. The for-profit is indifferent between this investment and any other that yields 6.5%, whereas the tax-exempt’s comparable investments yield 10%. Thus, investors consider their own return on investment and not that of other investors. If an alternate investment yields 8% post-tax for either investor, the for-profit would prefer the alternate to this investment but the tax-exempt would not.
- Open Chapter
Chapter 18. What to Do with Tax Revenue? 39 results (showing 5 best matches)
- These theoretical debates question the baseline against which a particular tax should be measured: Should a tax be measured against pre-tax income distributions or is the ability to earn income skewed enough to make the pre-tax distribution suspect? In other words, should a tax be evaluated against a world without any tax or in a world with a 100% tax? The answer likely depends on a person’s sense of the proper role of government. That starting position is likely to influence a person’s evaluation of the tax as people anchor their analysis to their starting point.
- or 100%, expresses maximum inequality where only one person has all the income and the others have none. In 2019, the U.S. had a pre-tax Gini index of 0.505 and after-tax Gini index of 0.395; compared to Norway’s pre-tax 0.427 and post-tax 0.261 and Bulgaria’s pre-tax 0.523 and post-tax 0.402.
- One effect of decreasing inequality through progressive taxation is that those with rising incomes contribute more to the government, providing more revenue with which to implement government projects. As people earn income faster than inflation, government revenue increases because more national income is taxed at the higher tax rates applicable to higher-income taxpayers. Therefore, although tax rates have largely fallen for each income quintile, overall more income is subject to tax at higher rates. This bracket creep means that more income is pushed into higher tax brackets but, because tax brackets are adjusted for inflation, only with real increases in income.
- Mandatory spending’s revenue does not necessarily come from a different source than does discretionary spending. However, revenue for mandatory spending may also come from earmarked taxes, for example payroll taxes funding Social Security and unemployment. Earmarks do not cover all of mandatory spending, and the revenue raised does not currently limit the amount spent.
- In a progressive tax system, the government takes income or wealth from the haves. Even with equal spending to every member of society, income is redistributed because the haves pay more in tax than the have-nots or the have-lesses. In a progressive spending regime, redistribution can be accomplished with equal taxation by spending more money on the have-notes and have-lesses. In a regressive regime, whether tax or spending, the government takes from the have-lesses and gives it to the have-mores.
- Open Chapter
Chapter 3. History of American Taxation 113 results (showing 5 best matches)
- Second, a facially stricter constitutional limit on the power to tax is the limit on direct taxes. The Constitution requires that direct taxes be apportioned between the states. This means that each state must bear the tax equal to its share of the national population, and states with more people owe more tax even if those states have less wealth. This results in different tax rates in different states, making direct taxes politically unlikely. At the founding, newer states’ populations were high relative to their taxable property, so that apportioned taxes would have created higher rates of taxation per capita in new states, favoring the original colonies. What direct taxes included, however, was unclear. When Gouverneur Morris introduced the phrase in the Constitutional Convention, Rufus King asked what it meant. No one answered. It is unlikely that many taxes would be identified as direct taxes today, although there has been debate about whether a wealth tax is a direct tax.
- During World War II, President Roosevelt urged reform of the tax system; however, the need for revenue drove changes more than a widespread desire for reform in its own right. By the end of the war nearly 90% of the workforce was required to submit federal income tax returns and 60% paid some amount of income tax. Tax rates were raised and made more progressive, ranging from 22% to 94%. The income tax raised $45 billion in 1945, which was about 54% of what the government spent that year on the war effort. Since the war, tax rates have fallen and, with lower top rates, the tax is less progressive. Nevertheless, World War II had a profound impact on the tax system, converting the individual income tax into the bread and butter of the federal government and from a tax on elites to a tax on the masses.
- Supply-side economics did not prevent the revenue loss from tax cuts and increased military spending. These two factors necessitated restructuring and eliminating many of the earlier tax cuts in 1986. Nevertheless, top tax rates were lowered from 50% to 28% and parts of the tax system were simplified. Codification of the Internal Revenue Code in 1986 solidified some of these changes. In the process, the tax burden shifted towards payroll taxes and investment taxes and away from capital gains and high-income earners.
- When tax policy is a popular topic, almost as much modern debate is framed around tax deductions and credits as it is on rate reductions and increases. For example, in 1997 President Bill Clinton pushed the enactment of the Child Tax Credit, which began as limited tax relief for middle-income families. Similarly, in 2000 tax reduction took targeted form, lastingly as favorable rates for dividends and capital gains. Popularly called the Bush tax cuts, these tax cuts were begun in 2001 and accelerated in 2003 but were to expire in 2010 because the revenue cost of a permanent tax cut was too great. They were largely extended in 2010 and made permanent during President Obama’s administration in 2012. This newer movement has added many targeted tax preferences throughout the Code.
- The American colonies did not have an advanced tax system, and they did not raise much tax revenue. Disliking taxes, colonials fought a revolution many claimed was over the power to tax. They complained of the British Parliament’s ability to impose and enforce taxes to fund the Seven Years War. They focused on their lack of direct representation in Parliament and generally ignored that the war produced significant benefits for the colonies. In the Boston Tea Party, Americans destroyed almost $2 million (in 2022 dollars) worth of tea to avoid taxes. George Washington, and many other colonials, reacted negatively to this destruction of private property and urged Boston to pay restitution, if not the tax.
- Open Chapter
Chapter 16. Taxation of Race and Class 112 results (showing 5 best matches)
- The current tax system continues most of those tax realities except that the federal income tax disperses significant amounts of government largesse to the public. Under this regime, low-income tax filers can receive a lot through the tax system. Most provisions favoring low-income taxpayers are tax credits that phase down or out as a taxpayer’s income rises.
- Tax Policy Ctr, T21–0161 Tax Units With Zero or Negative Income Tax, 2011–2031,
- These numbers reflect the complexity of what the tax system must accomplish. Traditionally, the tax system focused on raising revenue that was distributed through other parts of the government. In such a regime there is little to be done for low-income people other than to exempt them from tax. Even if a person lived in poverty and was not subject to the income tax, low-income workers were expected to pay payroll taxes on every dollar that was earned, sales tax on much of what they bought, and property taxes on what they owned.
- For example, documented and undocumented immigrants pay sales taxes on their purchases of goods and pay property taxes on their residences. Estimates are that over 3 million undocumented workers, or 28%, own homes on which they pay property taxes. they do not own their homes, undocumented workers pay property taxes indirectly through their payment of rent. The Institute on Taxation and Economic Policy found that, in 2014, 11.1 million undocumented immigrants paid a total of $11.74 billion in state and local taxes, of which $3.6 billion was in property tax and more than $7 billion was in sales and excise taxes. If these immigrants were legalized, the amount they would pay in tax would increase by an estimated $2.18 billion per year.
- The federal tax system is generally a progressive tax system, although its component parts are more or less progressive. Therefore, the government raises disproportionately more money from higher income taxpayers but only when the tax system is examined as a whole. It was popularly reported in 2020 that 61% and in 2021 57% of taxpayers had a zero or negative individual income tax and, because of COVID-19, 20.5% and 19.3% had neither income nor payroll taxes. These numbers should be unsurprising as much of the federal government’s COVID-19 relief was administered through the tax system, when many people were out of work and not earning wages. Additionally, even without the COVID-19 pandemic, the EITC and the child tax credit are the nation’s largest aid programs. Thus, much of the federal welfare system now operates through the income tax system. In most, non-pandemic years, many of those who do not owe income tax do, nonetheless, owe payroll taxes.
- Open Chapter
Chapter 15. Taxation of the Family 130 results (showing 5 best matches)
- To reduce this planning opportunity, Congress enacted the “kiddie tax” in 1986. Regardless of the existence of the kiddie tax, if a child earns sufficient income to be taxed, the child is taxed as an individual; the kiddie tax adds a catch regarding the applicable tax rate for unearned income on investments. Children under the age of 24 who are full-time students and who do not earn more than one-half of their support or children not yet 19 have their unearned income taxed at their parents’ highest tax rate. This requires parents share information with each other and their children, but it is considered more favorable than the Tax Cuts and Jobs Act application of the trusts and estates tax rate that was repealed in 2019. Reducing its impact, the kiddie tax does not negate preferential capital gain rates; however, the tax does determine which of the favorable capital gain rates applies.
- The tax system cares about the taxpayer’s family status for two reasons. First, taking care of others may decrease a person’s ability to pay taxes, and the system reduces taxes in response to some of the financial burdens of caring for one’s family members. Second, taxpayers are most likely to work with those they trust to avoid taxes, making families natural allies in tax avoidance. For this latter reason, tax authorities closely scrutinize families. Thus, there is a push and pull of family status in taxation.
- Adopting an individual-based system might also produce different taxes for couples within a single state based on couples’ relative tax planning. Historically, the easiest means for couples to reduce their collective taxes was for one spouse to sell or to make a gift of income-producing property to the lower-income spouse. With a return to individual filing, couples could again engage in this form of tax avoidance behavior. Doing so might advance some notion of fairness to the extent the transfers increase the wealth and relative power of the lower-income spouse, if at the expense of tax revenue.
- Much as marriage can offer a tax break for couples, so can divorce. The existence of different tax treatments for different payments opens the door for careful tax planning if divorced spouses are in different tax brackets and are willing to structure their divorce settlement to decrease their taxes. If they either do not or cannot plan effectively, couples will have higher taxes relative to couples who use divorce as a tax planning opportunity. This result has long been a feature of the Internal Revenue Code, although not all divorcing couples are aware of this possibility or are in a position to benefit from this planning.
- However, not all divorcing couples can benefit from this tax savings. The receipt of tax savings on divorce is contingent upon having appreciated property or children. Even when alimony could produce income shifting, couples with two poor spouses or two wealthy spouses gained no tax advantage. Thus, divorce-related tax reduction is not and has never been tied to need. More targeted tax relief to divorcing spouses in need might be a more cost effective and equitable system than current law.
- Open Chapter
Chapter 1. How Law Is Made 103 results (showing 5 best matches)
- Additionally, it is easier to build a budget surplus when the economy is doing well. With tax rates held constant, the system raises more income tax during economic upturns because more income is earned. When a taxpayer earns more money, the taxpayer may also be pushed into higher tax brackets, raising more revenue from each additional dollar earned. Even without higher brackets, more income taxed at the same rate produces more tax revenue. That bump in revenue has been used to justify reducing tax rates in good times. However, during economic downturns, the same tax rates will yield less tax revenue because less income is earned. This effect gives income taxes a degree of an automatic counter-cyclical effect.
- Kwall suggests that taxes are inherently bad and without revenue demands taxes would be abolished. The government needs revenue so the tax system should be judged for meeting, or not, that need. However, the link between tax and spending can be used to ratchet tax rates up or down. The argument can be used to demand more revenue from the tax system if the person values the spending or to cut spending if the person dislikes taxes.
- Regardless of whether taxing and spending policies should be linked, tax policy faces conflicting imperatives caused by this implicit linkage. First, there is the goal of creating a perfect tax system as judged by tax norms. We want a fair, efficient, and simple tax system. Second, there is the reality of creating the best tax system that meets the demands of spending. If the perfect tax does not raise sufficient revenue, it has no chance of being enacted. Finally, there is the need to understand that tax is part of the overall economic system. The unintended consequences of tax policies may ripple through the larger system in ways that no one can predict or even fully understand.
- The fate of much tax legislation hangs on the Byrd Rule’s limit on amendments and the permissive majority vote of reconciliation. Without these rules, much tax legislation would fail. For example, neither the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, popularly referred to collectively as the Bush tax cuts, nor the Tax Cuts and Jobs Act of 2017 would have passed with a supermajority requirement to stop a filibuster.
- Although the Committees on Ways and Means and Finance are delegated the responsibility for drafting tax legislation, they do not have free reign to do so. The process for creating new tax legislation is bound by structural limits created to reduce the size of the federal budget deficit. In particular, the reconciliation process is often used to pass tax legislation but requires Congress raise an amount of tax revenue dictated by the budget committees. Thus, reconciliation limits the size of the deficit by linking taxing and spending.
- Open Chapter
Chapter 10. Payroll Taxes 73 results (showing 5 best matches)
- However, these taxes are parts of progressive regimes. While the Social Security tax caps the amount of earnings that are subject to tax making it a regressive tax, the payout structure is progressive over a generation. It is impossible to say with precision whether payroll taxes and accompanying benefits as a whole are regressive or progressive in practice.
- Payroll taxes are based on employees’ wages and used to fund large parts of the Social Security, disability, Medicare, and unemployment insurance systems. These taxes raise approximately 35% of federal revenue, more than any source other than the individual income tax. Payroll taxes also constitute a major portion of most individuals’ tax burden, particularly among lower-income taxpayers. One estimate is that 75% of taxpayers pay more in payroll taxes than they do in income taxes. Another study shows that the bottom fifth of households pay an average of 6.9% of their income in payroll taxes whereas the top 1% pays just 2.3%.
- Payroll taxes are usually calculated as a percentage of an employee’s salary. Except for unemployment insurance, which is paid entirely by the employer, half of payroll taxes are paid by the employer and half are paid by the employee. Like the income tax, employees’ portion of payroll taxes are withheld by employers from employees’ wages and paid to the government on employees’ behalf. Self-employed workers are required to pay an equivalent of both halves of these taxes and to perform the necessary administrative filings because they are effectively both employer and employee.
- Payroll taxes are almost certainly regressive in that they constitute a larger share of lower-income earners’ income than of higher-income earners’ income. The Tax Policy Center listed effective payroll taxes for different income groups, and, in 2018, the lowest quintile had an effective payroll tax of 6.5%, the second quintile had 7.7% and the top 0.1% had 1.1%. Payroll taxes clearly have regressive features, such as a flat (rather than progressive) rate structure, no standard deduction, and no exemption.
- Both the federal and state governments impose unemployment taxes. The federal payroll tax to fund its share of unemployment benefits is paid by employers and calculated as a 6.0% tax on the first $7,000 of gross earnings per worker per year. The total possible federal tax is $420 per employee. Although a small tax, it can raise a significant amount of revenue. For example, in 2021 Ohio had over
- Open Chapter
Introduction 21 results (showing 5 best matches)
- Tax policy’s impact is far greater than the amount of revenue that can be raised. An enacted tax’s form affects the distribution of its burden and its benefits. Taxes can be structured to impose its least, or greatest, burden on any particular group within society. Taxes can contain many special provisions to encourage or to discourage targeted behavior. Taxes can try to minimize their evasion or tacitly accept that some people will not pay them.
- However, tax policy is not much, if any, more complicated than other areas of social and economic policy. Taxes are statutory creatures that must tell taxpayers precisely what is and is not taxed, which at times necessitates complicated language. That complexity can be separated from the statute’s underlying goals. Complicated language largely responds to those who would exploit ambiguities in statutory language to their own advantage. In this way, most of tax policy is much easier to grasp than its statutory language. The concepts of tax policy can be broken down to pieces and assembled to make our national tax system.
- This breaking down and rebuilding requires mental work, despite politicians’ ability to reduce tax policy issues to sound bites. Whether a tax is susceptible to abuse, whether the taxpayer can shift the burden of taxes to someone else, or whether taxes are regressive in application are questions not always apparent on a statute’s face. Multi-faceted and unintended consequences abound when the government changes the tax law. Therefore, policymakers should think deeply about the intended and unintended consequences of tax
- Compounding the difficulty of understanding tax policy is the relatively recent use of the tax legislative process and the Internal Revenue Code to accomplish a host of government policies other than raising revenue. Thus, the process of drafting and enacting tax legislation has been usurped in the heavily partisan debates of recent years to force into tax legislation broader issues of social policy. Although not a wholly new phenomenon, the scope with which other policies and programs are operationalized through the tax code is new and appears to be growing.
- A fuller understanding of tax policy concepts and where the ambiguity lies helps policymakers frame tax laws in a way that is fairer, simpler, and more efficient. Thereafter, Congress can create a good if imperfect tax system. As Alexander Hamilton, a chief architect of the federal government’s fiscal system, once wrote:
- Open Chapter
Index 87 results (showing 5 best matches)
Preface 3 results
- When the Tax Cuts and Jobs Act of 2017 was enacted five days after the first edition of this book was published, I frantically updated the newly published book to address the Act’s many changes to the Internal Revenue Code. Then the nation faced the COVID-19 pandemic, and many of Congress’s responses were operated through the tax system. Incorporating these changes into this book and thinking about them as policy matters has been interesting as a glimpse at how the tax system responds to political, economic, and social change.
- Regardless of the political rancor and the difficulty of finding common ground on these problems, tax policy issues remain. As a nation we need to find a way to discuss these issues coolly and rationally. Hopefully this book can be a step to that end by providing readers a common vocabulary and an understanding of what we know and what we do not know about tax policy.
- On a deeper level, I was and remain today troubled that the partisan environment in Washington DC and throughout the country makes it difficult for people to discuss these changes specifically and tax policy in general in an open-minded way. With the hardening of positions, less effort is made to persuade because it has become too easy to berate. This has not always existed, and I hope we can return to a time when people were able to discuss tax policies in a more open-minded way.
- Open Chapter
Table of Contents 69 results (showing 5 best matches)
Summary of Contents 9 results (showing 5 best matches)
Part A. Tax Politics 1 result
Part C. Where to Tax 1 result
- Publication Date: April 14th, 2023
- ISBN: 9781636594637
- Subject: Taxation
- Series: Concise Hornbook Series
- Type: Hornbook Treatises
- Description: The new edition of Principles of Tax Policy explains the essential building blocks of the American tax system clearly and concisely, including the changes adopted in response to the COVID-19 pandemic and rising inflation in 2022. Chapters focus on the political process, individual and corporate income taxes, Social Security and other payroll taxes, state and local budgeting, international tax planning, and more. Each chapter opens with a brief description of the policy topic, providing a synopsis of the current state of the law, and is followed by a discussion of the arguments made on all sides of the major debates over the topic.
