Case Study: SMALL Flat Federal Tax

Throughout the entire existence of any form of government, there has always been taxes. Most of the time (if not all), people hate taxes. With this being said, the United States has adopted a progressive tax since its very existence. We believe that if our nation is placed under a flat tax system, our economy will operate more effectively. If we incorporate a flat tax system we will be able to ensure fairness among all citizens, eliminate tax loopholes, and allow opportunities for business expansion. With this being said, we will be examining the strengths and weaknesses about the flat tax system and how it has been used into practice.

The pool cost the petitioner over $19,000, and we cannot accept his contention that such amount was spent primarily for therapy for his leg in view of the limited need for such therapy and the alternatives which were then available.

Parent Corporation owns 85% of the common stock and 100% of the preferred stock of Subsidiary Corporation. The common stock and preferred stock have adjusted bases of $500,000 and $200,000, respectively, to Parent. Subsidiary adopts a plan of liquidation on July 3 of the current year, when its assets have a $1 million FMV. Liabilities on that date amount to $850,000. On November 9, Subsidiary pays off its creditors and distributes $150,000 to Parent with respect to its preferred stock. No cash remain to be aid to Parent with respect to the remaining $50,000 of its liquidation preference for the preferred stock, or with respect to any common stock. In each of Subsidiary’s tax years, less than %10 of its gross

In my opinion as to whether or not the current federal income tax structure is fair for most Americans is that it is not fair. The following information will provide support for my decision. The main federal tax brackets are for single individuals, married individuals filing separately, married individuals filing as a couple and individuals filing as a head of household. In the financial year 2014, the lowest tax bracket paid a rate of 10% on income up to $9,075 while the highest bracket paid an average rate of 36.4% ($406,751 and above). Most individuals pay taxes across several tax brackets, and as a result, they end up with the progressive tax structure. In the current progressive federal income structure, individuals with a lower

The IRS argues against the flat income tax since it is regressive with all taxpayers paying the same tax rate. While it is true that the current federal income tax system is progressive, the primary argument for a flat or flatter tax is to simplify the tax system. A flat or flatter federal income tax system with a limited number of exclusions and deductions could accomplish the same goals in a much more expedient way.

1) What is the couple’s taxable income and liability using the amounts reported on the tax return?

The governments in any country use various taxation systems to raise funds to fund its national projects. The most common tax system is the income tax whereby the government raises funds from individual’s earnings. However, in the past few years, there has been heated debate about the adverse effects of progressive income tax on productivity and a proposal to replace it with national sales tax (Hodge, 2017). The national sales tax also known as the fair tax is intended to replace the current income tax and the idea is to enable the government to generate income from consumptions as opposed to earnings. This document examines the positives and negatives of the proposed national sales tax on the U.S. economy. The suggestion to impose a tax on consumption rather than consumption aims at encouraging savings and investments to improve productivity and promote economic growth. It is expected to promote fairness in the taxation because individuals will pay according to what they consume and not what they earn.

With the next presidential election just around the bend, there have been many heated policy debates on both sides of the caucuses. One of the more intriguing of these has to be the debate on the structure of the current tax system. Many GOP hopefuls are putting forth plans to impose a Flat Tax System. The scope of this paper is not to analyze, per se, the reasons behind their putting forth such ideas. Instead, this paper will attempt to analyze the ethical considerations and ramifications of a flat tax system as opposed to our current progressive system. In order to accomplish this goal the following study will: present a thorough analysis of the background surrounding this issue; the stakeholders and their involvement in the issue as well as the issues effects on each; two ethical theories and test and how they apply; and finally a Biblical interpretation on the ethical issues that will be brought to light and a suggestion to believers on what side they should take given the analysis presented.

A new vote that is supposed to come up this week will be considered the second big act on tax reform. The Senate Republicans reveal a plan of their own that will be different in many places as the House. One of the main parts of the reform is to see how far the Senate Tax writers will go on the corporate tax rate. It would go from 35 percent to 20 percent; unfortunately the Senate has a budget that constraints them which the House does not have. As we know, anything that goes through the Legislative branch has to be the same in both houses. The Senate in this case wants to try to patch up some of the holes that erupted when the House GOP leaders revealed the bill last week. That includes the disagreement from the small business association

A client wants to know the difference between the tax treatment of a professional gambler and a normal taxpayer with gambling winning and losses.

Even when everything seems to be in favor for you to consider that your filing status is head of household since you had the custody and you fully support your son. The fact that nonresidents alien for tax purposes don’t qualify as a head of household at any time of the tax year. In your case, the filing status for the 2015 tax return is contemplated as single.

The words “income taxes” make people cringe at the beginning of every year. Every year we must file paperwork with the Internal Revenue Service by April 15th and worry if we owe the United States Government money or not. But, what if they replaced the income tax with a National Sales Tax? A National Sales Tax would be a consumption tax. A consumption tax would be charged when consumers buy goods. This tax, although higher than current local sales tax, would be the same concept, it would be added to the retail price of products. There are advantages and disadvantages to having a National Sales Tax that will be discussed further below.

The United States enacted IRC 385 in 1969, which gave tax authorities the power to determine if intercompany loans were, in substance, equity investments. The tax authorities believed then that characterising intercompany loans as equity would resolve the thin capitalisation issue. If the IRS could deem intercompany loans to be investments, it could treat the interest payments as dividends, which are not tax deductible. However, the tax authorities eventually determined these tools were inadequate. In 1989, Congress enacted (IRC) section 163(j) to address the concern of US earnings being “stripped out” in the form of interest payments on debt by a U.S. subsidiary to its foreign parent company. The concern was that the U.S. subsidiary would receive a U.S. tax deduction that reduces its U.S. taxable income while the interest paid to the foreign-based parent corporation may not be subject to U.S. withholding tax (or subject to a reduced rate) under various income tax treaties.

Policy makers have introduced a solution to the staggering proportion of taxes that Americans spend. The flat tax, based on an idea developed by Professors Robert Hall and Alvin Rabushka of Stanford University to create a fair, simple, and pro-growth tax system (Mitchell 1, 11). There are four basic criteria that make up a flat tax. First is a single low rate on taxable income, the baseline for taxable income would be raised to a certain amount dictated by a personal exemption. Second is simplicity, all Americans would fill out the same postcard-sized form to pay their taxes. Third is the reduction or elimination of deductions, credits, and exemptions, depending

Sales tax is one of the most conversed topics and in the national spotlight frequently. States have been struggling to gain a hold on internet sales and the related tax liabilities. Sales tax policy is an intriguing subject and the current internet revolution is pushing discussion of sales taxes to the forefront. This has caused a high level of distress held by business leaders, bureaucrats, and politicians in the field of sales tax. The current goal and focus on sales tax policy is that a more rational sales tax compliance environment can be developed.