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Wrap-Up Questions for Chapter 5

30 July, 2015 - 12:50
  1. It has been observed that the actual federal tax 1 burdens among different American taxpayers are not very progressive. Federal tax burdens could be made more progressive simply by capping a taxpayer’s total allowable exclusions, deductions, and credits. Perhaps a cap of $25,000 would be appropriate. Maybe it should be more, maybe less. What do you think of the idea of increasing progressivity by enacting such caps?
  2. At what point does it not pay to spend money in order to gain income that will not be subject to federal income tax?
  3. When the IRS in its enforcement mission must come up with an interest rate, it turns to the “applicable Federal rate.” What might be wrong with reliance on such a uniform rate?
  4. Congress has made the tax burden on the combined income of taxpayers who file married filing jointly exactly twice the tax burden on single persons with half the income of the couple. This reduced the tax bracket on married persons from what it was before Congress enacted this change. Is that preferable to giving relief only to those couples where both spouses work, as was the case when the Code provided for a credit based on the amount of income earned by the spouse who earned less?
  5. Congress has made the tax burden on the combined income of taxpayers who file married filing jointly exactly twice the tax burden on single persons with half the income of the couple. This reduced the tax bracket on married persons from what it was before Congress enacted this change. Is that preferable to giving relief only to those couples where both spouses work, as was the case when the Code provided for a credit based on the amount of income earned by the spouse who earned less?