In: Economics
1b There are various items that reduce taxable income relative to total income – what is the general term for these items (collectively, do not list all of them individually)?
The term used is personal exemptions. They can be used to claim as a tax deduction against personal income in calculating taxable income.
What do you think is the economic justification for these not being included in taxable income? Pick one and explain its specific justification.
This can be claimed if the spouse has no gross income. It is clear that when spouse has no income becomes dependent on a person earning money. To maintain standard of living more money would be required and hence tax benefits should be given and it is completely justifiable.
1c: Under ‘taxable income assessed’ there are various items, usually called ‘amounts’. What is the general term for these items? Pick one, and explain briefly what you think the economic justification for it being included here is.
These are the 'deductions' a person gets on different heads.Example- student loan interest deduction. A student who is pursuing education may be given deduction for interest paid.