Question

Write a memo to the chief financial officer (CFO)

What are the three broad restrictions on taxpayer behavior?

How do these doctrines affect taxpayer behavior?

Is it socially beneficial to have these doctrines?"

Answer 1

TO: Chief financial officer

Date: September 1, 2018

Subject: Taxpayer behavior and its affect

Through this memo, I wanted to draw your attention towards the three broad restriction on taxpayer behavior. Taxes are imposed to salaried person for the benefit of society. For this court has developed judicial doctrines to analyze the transactions and its tax consequences. Along with this judicial doctrines there are federal income tax namely Sin Tax, Gasoline Tax and Luxury Tax which designed to influence the behavior of taxpayers.

1. A sin Tax is a tax on product or any services provided which is unhealthy. This tax is used to discourage the purchase and use of product that affect the health such as Tobacco and alcohol.
2. Gasoline tax is a tax which is generally designed not to discourage use of gasoline. People who use gasoline pay taxes and this taxes are use on maintaining and building roads and highways by government.
3. Luxury tax which is tax expenses and impose on those who buy luxury goods such as luxury or imported cars which attract high taxes and same taxes are use on citizens through various government schemes. However, when luxury taxes become more excessive people may choose to stop buying particular product of their desire.

Having these judicial doctrines is socially beneficial because when demand increase on either Sin tax, Gasoline tax or Luxury tax the government will have more revenue through this taxes which can be further utilize for the benefits of taxpayer or society.