Question

In your own words! What are the current tax issues being reported in the press and are there any major changes that might be coming up in the future? Do you think that these changes are going to help our economy or set us back and why?

DO NOT COPY FROM A BOOK OR ARTICLE!

Answer 1

The current tax issues which are being faced and reported are:

A. Inequality of taxation ( taxation for low and middle income group): Under the current taxation regime, the loe and middle income earners are facing very high effective msrginak tax rate. The net effect of earning high is proving to have more effective tax rate for that income group. This situation is very discouraging .

However, the taxation for the riches have not changed much since the past years. Their earnings have increased considerably because if the financial reforms and measure but not the taxes.

B.Reformation of the Corporate Taxation: The unethical practices adopted by the Corporates to evade the taxes by adopting transfer pricing measures or other mechanisms reduce their tax liability a lot. In the corporate business, debt is preferred over equity hence there are numerous ways for the corporates for tax avoidance.

C. Increase in the Environmental taxes: The increase in environmental taxes like carbon taxes is much welcomed as it contributes a lot to our environment.

The major tax changes reported are:

A. The removal of personal exemption .

B. New top rate of taxes introduced @37% for income more than $500,000.

C.The exemption doubles to $11.2 mn / individual.

D. Increased contribution limit for retirement savings by $500.

E. Increase in child tax credit.

F. Increase in Standard deduction .

The changes like increase in Standard deduction , increase in retirement savings plans are very welcoming as these will help the low and middle income to grow more. As the majority of the tax payers constitute low and middle income group the changes like removal of personal exemption is discouraging.

And also I feel, that doubling the estate exemption is giving benefit to the rich when they are capable of providing for the taxes, it is also resulting in lower tax revenue generation.