财政学十五章重点介绍.ppt

Chapter 15 – The Personal Income Tax CONTENTS Basic Structure Defining Income Excludable Forms of Income Exemptions, Deductions, and Credits AMT Marriage Tax Basic Structure Figure 15.1 shows the series of steps used to compute a person’s tax liability. Step 1: Compute Adjusted Gross Income (AGI). Step 2: Convert AGI into taxable income by subtracting exemptions and deductions. Step 3: Compute tax due by applying a rate schedule and subtracting tax credits. Figure 15.1 Basic Structure Later in this lesson, will discuss extensively the “real-life” aspects of the U.S. tax code. Before doing that, useful to think about what the tax code “should” look like. Defining Income Which forms of income could be taxed? Wages and salaries, rents, dividends, and so on … Haig-Simons definition of income: Income is the money value of the net increase in an individual’s power to consumer during a period. Defining Income H-S criterion: Includes net additions to wealth All sources of potential increases in consumption (regardless of whether consumption took place) Subtracts losses Defining Income:Items Included in H-S Income H-S definition encompasses: Items ordinarily thought of as income include wages, salaries, business profits, rents, royalties, dividends, and interest Employer pension contributions and insurance premiums Transfer payments like Social Security, Unemployment Insurances, and Welfare Capital Gains (whether they are realized or unrealized) Imputed rental income from durable goods Defining Income:Problems Business expenses are often difficult to parse out into “consumption” and “costs of obtaining income” Unrealized capital gains and losses difficult to measure Imputed rental income from durables difficult to impute In-kind services (such as housework) difficult to value Defining Income:Evaluating the H-S Criterion Clearly, arbitrary decisions need to be made on how to define income from a practical point of view. H-S criterion appeals to: Horizontal equity – p