Income Tax And Its Effect On Total Income

The current tax policy in the United States is very confusing and it is very costly for our government to administer it. It is in the best interest of our country and its citizens to revise or replace our current tax policy.

Arlen is required by his divorce agreement to pay alimony of $2,000 a month and child support of $2,000 a month to his ex-wife Jane. What is the tax treatment of these two payments for Arlen and Jane?

Taxes are very argumentative when coming to what everyone considers equal. There are many different tax options, in which all people have different opinions on. These taxes include a value-added tax, progressive tax, flat tax, and national sales tax. I believe getting rid of our current tax system, and implementing a flat tax in America would be the best option. Different sides of politics, each have pros/ cons for each of the different tax systems, but with just the right tax system things could improve and more things could be equally agreed on between the politicians.

The issue of taxes and different tax systems is arguably one of the most important issues to many Americans. Having an effective Tax Code is definitely important in maintaining a healthy economy; however, there are different perspectives when it comes to the rates and percentages that citizens pay.

A Health Savings Account (HSA) plan requires a high-deductible medical insurance policy, which means that the premiums on the policy will be less than for a low-deductible policy. The contributions to the HSA are deductible for AGI, which reduces the nondeductible amount of itemized deductions subject to certain limitations, and the taxpayer does not have to itemize to obtain the deduction. The HSA distributions pay for the deductible medical expenses and they are not included in gross income. Also, the income earned on the HSA is not included in gross income if it is used to pay medical expenses not covered by the high-deductible plan.

Our current income tax system today is very complex, unfair, inhibits saving, investment and job creation, imposes a heavy burden on families, and weakens the integrity of the democratic process. It can't be fixed and must be replaced. The U.S. income tax code is a long and complex system. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year. The administrative costs of the tax system far exceed those borne directly by the IRS. Each year Americans devote 5.4 billion hours complying with the tax code, which is more time than it takes to build every car, truck, and van produced in the U.S.

The corporate income tax is one of the most poorly understood methods by which the U.S. government collects money. Corporate profits were first taxed in 1909, when Congress enacted a 1 percent tax on corporation income. The rate rose to 12.5 percent a decade later, and progressive rates that increase with income were added in 1932. Surtaxes on corporate income were added for “excess profits” and “war profits” during both world wars. The highest peacetime rate, 52.8 percent, was reached in the 1960s. The Tax Reform Act of 1986 was designed to increase the share of federal revenues collected via the corporate income tax and to decrease the share from the individual income tax. While the top corporate tax rate, like the individual rate, was cut to 34 percent deductions for capital expenditures were severely curtailed and the investment tax credit was repealed. As a result, the effective tax rate for many corporations rose. Many people see the 1986 Tax Reform Act as a model for comprehensive tax reform. This bipartisan legislation was able to achieve revenue by balancing rate reductions for both individuals and corporations with ending many tax preferences. The result was perceived as a simpler and economically efficient tax code.

1.Amounts not convertible into money :In Tennant v Smith (1892) free accommodation provided to a bank manager was held not to be ordinary income because building could not be sub-let and the benefit thereby converted to money. In FCT v Cooke & Sherden (1980) an incentive prize offered by a manufacturer was not income of the winning retailers because it was not transferable and so not convertible into money.

The one topic that has continually been a major topic in the United States is the topic of taxes. It has been a key component of political campaigns at all levels since the political scene has been of interest to me. There are two major tax systems that are viable options in the U.S. today. There is the federal individual income tax system and a single rate flat tax system. The U.S. currently uses the federal individual income tax system. This type of tax system got its start in 1864 after the American Civil War (‘The New Income Tax,’ Dunbar). It was the second tax ever used by the U.S. and was the first tax used during a time of peace. The tax system has continually become

The Tax system of the United States is in absolute disorder. Politicians on both sides, of the political spectrum, agree that the tax system that we use today is complicated and expensive. In order to completely understand the immense tax problems that are in this country, the current tax problems must be first analyzed and explained, short terms solutions must be created and used as a temporary answer for these problems, and finally long term solutions must be the permanent fix for the myriad of the problems that are troubling this nation.

Based on Table 2.2 in the President's Budget, we see the sources of revenues for the federal government primarily are the sources of revenue from taxes included individual income taxes, corporation income taxes, excise taxes, the source of revenues from social insurance and retirement receipts and other revenues sources. Before World War II, the main income source of the US government is the source of excise taxes, accounting for 33.57% total revenue. Then, the key source of revenue is the source from personal income tax, approximately 45% total

This paper encapsulates the loopholes and put forwards few strategies that are important for raising fund in the state of Illinois and thus supporting the low-income individuals. The paper proposes the steps that need to be taken in order to increase revenue and how to invest more in the human capital as to flourish and improve the society.

Individual Income Tax: This is the number one contributor to income for the government. The stagnant of U.S. salaries has been challenging hence limited tax collection. Another limiting factor is the tax cuts legacy from the Bush

1. The three major categories of revenues for the federal government are personal income taxes, corporate income taxes and social insurance taxes. According to the CBO's estimates for 2012, personal income taxes account for 50.3% of federal revenues, while corporate income taxes account for 10.65% and social security taxes account for 33%. Other income sources only account for 5.9% of the total budget. Thus, when considering changes that will have the most significant impact on the budget, personal taxes need to be given the most consideration.

Income tax as defined by Melville, 2014 (page 15) is: “tax assessed for a tax year (or “year of assessment”) and is based on the taxpayer 's total income for the year from all sources, ignoring any income which is exempt from income tax” . Sovereign nations set their own taxes individually and as such taxpayers respond differently depending on the changes in tax rate in the respective tax system. The changes in income tax rate from one tax year to another affects both high and low income earners. However, in an analysis for four decades of the US tax system, it was concluded that high-income earners tend to respond to a greater extent to tax changes than low-income tax payers . Likewise, Micro economists suggest that this is majorly due to the fact that educational achievements are a major contributor to the differences in income between