Exemptions, deductions, and tax credits can lower a taxpayer's taxable income. Discuss their relative merits in terms of helping taxpayers reduce their tax liability
What will be an ideal response?
Assuming a constant dollar amount, the most valuable of the three to a taxpayer would be the tax credit. This is because the tax credit directly reduces a taxpayer's tax liability, while the other two merely reduce the level of taxable income. If a taxpayer itemizes, then deductions and exemptions of a similar amount are of equal value to her. If, however, a taxpayer does not itemize and instead takes the standard deduction, then the exemption would be more valuable than the deduction.
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Refer to the scenario above. A firm producing Good Y will continue production in the short run if total revenue exceeds ________
A) $25,000 B) $60,000 C) $85,000 D) $35,000
A successful and stable cartel can be established if there are
A) many firms producing a storable product. B) many firms producing a perishable product. C) a few firms producing a storable product. D) a few firms producing a perishable product.
The initial impact of an increase in an investment tax credit is to shift
a. aggregate demand right. b. aggregate demand left. c. aggregate supply right. d. aggregate supply left.
When the coupon rate on newly issued bonds decreases from 6% to 5%, the prices of existing bonds:
A. increase. B. remain unchanged. C. decrease only if the coupon rate is less than 5%. D. decrease.