哈维罗森_财政学(第八版)英文课件Chapter_17

17-16
Flat Income Tax

Features of Flat income tax

Applies same tax rate to everyone and each component of income Limited deductions

Arguments in favor
17-11
Impact on the Tax Base
Impact of Subtractions from AGI on the Tax Base, 2004
32%
68%
Subtractions from AGI
Taxable Income
17-12
Tax Expenditures


What are tax expenditures?
$74,200-$154,800 $154,800-$336,550
$336,550 and over
28 33
35
$123,700-$188,450 $188,450-$336,550
$336,550 and over
28 33
35
17-15
Effective versus Statutory Rates


Subtract costs of earning income
17-3
Items Included in H-S Income



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Employer pension contributions and insurance purchase Transfer payments, including Social Security benefits, unemployment compensation, and welfare Capital gains

Individual retirement account (IRA) Roth IRA
401(k) plan
Keogh plan Education savings account

Gifts and Inheritances
17-7
Personal Exemptions

Allowable Exemptions
Wages and compensation, Trade or business expenses, interest, dividends, capital gain moving expenses, educator (or loss), business income (or expenses, self-employed loss), pensions, farm income (or health insurance premium loss), rents, royalties, Social payments, student loan Security benefits, etc. payments, tuition and fees,
Pay tax or claim refund
alimony paid, etc.
Charitable contributions, home mortgage interest, state and local taxes, medical expenses in excess of 7.5% of AGI, casualty and theft losses, nonreimbursed employee expenses; Phase out with income; Differs by filing status


Tax Reform Act of 1986 (TRA86)
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
17-14
Rate Structure
Official Statutory Tax Rate Schedule (2006) Single Returns Joint Returns

Realized versus unrealized
Imputed rent
17-4

Income in kind

Some Practical and Conceptual Problems


Computing income net of business expenses
Computing capital gains and losses Computing imputed income from durables Valuing in-kind services
17-5
Evaluating the H-S Criterion


Equity – treats likes alike
Efficiency – treats all forms of income the same; decisions made on the basis of economic value not tax consequences

Taxpayer and spouse Children under 19 (or 24 if in school) Children and other relatives who pass certain tests (depend on taxpayer for support) Phase out Adjust ability to pay for presence of children Provide tax relief for low-income families

Statutory rates differ from effective rates

Tax system treats some forms of income preferentially


Tax shifting
Excess burden and administrative costs
Annual tax expenditure budget Technical problems with measuring tax expenditures

Incentive effects


Defining income
Philosophical objections
17-13
The Simplicity Issue
17-6
Excludable Forms of Money Income

Interest on State & Local Bonds
Some dividends Capital gains Employer contributions to benefit plans Some types of saving
17-2
Haig-Simons Income (Comprehensive Income)


Income = Consumption + DNet Worth
Maximum consumption taxpayers can enjoy without spending down their wealth Anything received that can be used, either now or later, to purchase goods and services


Unreimbursed medical expenses > 7.5% AGI
State and Local Income and Property Taxes Certain Interest Expenses

Interest on consumer debt Interest on qualified education loans Interest on debt incurred to purchase financial assets Interest on home mortgages
CHAPTER 17
THE PERSONAL INCOME TAX
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Computation of Federal Personal Income Tax Liability

Why are there exemptions?

17-8
Deductions


Standard versus Itemized
Deductibility and Relative Prices

PZ (1-t)PZ
17-9
Important Itemized Deductions


Altig et. Al. [2001]

Interest rules in terms of H-S criterion

Tax Arbitrage Charitable Contributions
17-10
More Deduction Issues


Deductions and complexity
Deductions versus credits Itemized deduction phaseout Standard deduction
Taxable Income $0-$7,550 $7,550-$30,650 $30,650-$74,200 Marginal Tax Rate 10% 15 25 Taxable Income $0-$15,100 $15,100-$61,300 $61,300-$123,700 Marginal Tax Rate 10% 15 25


Reduces excess burden Reduces incentive to cheat Greater simplicity Equity
Shifts burden from rich to middle class Simplicity an illusion

Arguments against
Tax Base - “Above-the-line” Phase-out deductions Child tax, additional child tax, EITC, with income Adjusted Gross Income Learning, Six HOPE and Lifetime ordinary rates (10%, 15%, 25%, health coverage electric vehicles, - Exemptions 28%, 33%, 35%); tax, adoption, mortgage interest, differs by filing retirement savings contribution, - Larger of standard deduction credit, status; special child and dependent care or itemized deductions rates for the elderly credit disabled, Start over Taxable Incomefor dividends or theto determine AMT and capital gains D.C. First-Time homebuyer’s credit, tax liability using AMT base. etc.; Phase-out with income • tax rate Pay tentative AMT liability in excess of regular tax liability Tax liability before credits - Tax credits Regular tax liability