Question

Please answer by type words, do not hand writing and pictures

1. Does your state have an individual income tax? If so, how closely does it conform to the federal tax? Can one deduct the federal tax in computing the state income tax? List some specific ways that the federal and state tax bases differ. What problems, if any, do these differences create in computing your taxes? What additional issues have been created in as a result of Federal Tax reform in 2017. (10 points)

2. What is the rate structure of your state income tax? Are the rates progressive, and if so, how does that progressivity compare to the federal income tax rate structure? (5 points)

3. The two most important state taxes are income and general sales taxes, although states also make substantial use of excise taxes, direct business taxes (usually a corporate income tax), and others. List and discuss briefly four factors that might influence a state in choosing between an income and general sales tax. What is the relative reliance in your state on these two taxes? If the relative reliance in your state is different than average, speculate about why that might be so. (10 points)

Answer 1

(1)

• yes,newyork state has a sepaerate individual income tax.
• The tax slab are more are less quite same as federal tax return. new york has its own income taxes rather than those collected by the state. NY city tax rates range from 2.9%-3.88%
• No. But we can deduct state taxes paid in federal tax return.
• with respect to ndifference in federal and state tax base difference ,. new york city allows tax credit on 20% of premium paid on long term care insurance. But the federal return does not accept this tax credit.

(2)

The rate of tax in my state is progressive because a progressive tax rate means average tax rate increases as income increases.

Fed tax rate is also progressive because as income increases, tax rate increases. Thus average tax rate increases as income increases leading to progressive taxation policy in U.S.

(3)

There are number of factors that influence taxes. One of the most important source is through property tax. It contains a huge amount which helps the government. The structure of income tax is influenced by the government decisions.

For illustration, In country xyz sales tax is governed at the state level and no national level sales tax exists.

Let us discuss few factors which influence the state in choosing between an income and general sales tax. They are discussed as follows:-

1.Policy making- Policy plays an important role. It fluctuate the different economic activities. Policies like fiscal and monetary policy influence the state revenue. It pressuries the state to invest at the proper place.

2.Economic competition- Economic competition influence the state to choose between an income and general sales tax.

Globalization is growing day by day leading to competition and opening up more market options for the consumers. However, it had also led the state government to change the tax structure from time to time.

3.Nature of state revenue system- Next important factor is the nature of the state revenue which usually keeps on changing. A large portion of personal disposable income is exempted from the income tax.

4. Government intervation- Government plays an important role in decision making of the taxation system. It keeps reminding the state on their investment on medicare, education , housing facilities etc. It somewhere pressurize the state government to take the right decision regarding tge tax structure and should owe a reasonable fund to invest on public programs.

In countries like India, GST too had been an important factor in influencing the state to choose between an income and general sales tax.

Let us understand it through illustration. The taxation on fossils production had influenced the state reliability on revenue.

Let us understand it through points

1. They have different production and revenue that differ state wise.

2.The fluctuations in the fossils like natural oil, coal had influenced the state revenue.

3.The changes in the prices and quantity also influence taxation.

4 The tax application differ state by state.

5.Most state have some version of severnce tax, a kind of net value at the time of production.

I have taken an example of fossil fuel that how it influence the taxation of state.

Country Alaska had four sources of revenue from

1. oil revenue

2.income from taxes

3.federal revenue

4. investment revenue

Both revenue generated from resources and investors plays an important role in revenue scenario of Alaska.

However, some countries or states are raising their revenues through cap and trade program.

The relative ineffectiveness of government in states had led to the changes and fluctuation on the revenue or taxation structure from time to time. Taxation had been a challenge in developing countries. Proper taxation is must needed to deal with the current and future situations of the economy. The current situation of atate in revenue administration. The current capabilities of developing countries are mixed.Three aspects need to be considered.

1.Nature of the economic activity

2.Complexity of transaction and

3.Action of the tax payer with the structure

Tariff, excise and service tax are less efficient becaiae tgey are applicabke for subset of few goods and services. Imported goods are the easiest for island transcation. Service tax had been an attractive option because of its easeof administration.