Economics of Taxation Essay Example | Topics and Well Written Essays - 1000 words - 1

Economics of Taxation - Essay Example Does the Family Credit alter the marriage penalty or bonus? Under the current 2006 tax system, the value of the personal exemption and standard deduction for household 1 (married couple) would be a consolidated amount of $16, 400. This is made up of the personal exemption of $3200 ($6400 for 2) and a joint standard deduction for the married couple of $10,000. The same value calculated for household 2 amounts to $8200 for personal exemption ($3200) and standard deduction ($5000). As per the Simplified Income Tax Plan proposed by the advisory panel on tax reform, Family Credit replaces the personal exemption and standard deduction. It is available to all taxpayers. For a married couple with no children, it amounts to $3300 whereas for an unmarried taxpayer it is $1650. Assuming that the current income tax brackets prevail, the following comparative analysis would justify whether the taxpayers prefer the old tax code or the new Simplified Tax Plan: 2. Which is more equitable: the current system with the personal exemption and the option to take either the standard or itemized deduction, or the Family Credit which everyone can take, even if they also itemize deductions? Discuss both horizontal and vertical equity and explain your answer. Solution: â€Å"Tax equity focuses on equal treatment of similarly situated taxpayers† (Sommerfeld, Anderson, & Brock 9). There are two tax principles, namely, horizontal equity and vertical equity. Horizontal equity is a basic yardstick used to measure whether tax burdens are fairly distributed. According to this principle, taxpayers with same income should pay the same amount in taxes. On the other hand, the principle of vertical equity is a proponent of the progressive structure of tax assigning high income earners greater responsibility to share the tax bill (Kaplow 1989). Under the current system, personal exemption is available to

Cost Benefit Analysis Essay Example | Topics and Well Written Essays - 9000 words

Cost Benefit Analysis - Essay Example [Refer to Appendix B] It was found, by the 1999 survey statistics in a table entitled "Extent of Flame Damage by Major Property Use, 1999, Structure Fire Reported to U.S. Fire Department" that in just the area of residential properties of only one and two family dwelling houses that: Table 6.2:Loss per Fire in One and Two-Family Dwellings, by Extent of Flame Damage Annual Average of 1989-1998 Structure Fire Reported to U.S. Fire Department [National estimates based on NFIRS and NFPA Survey] These are fires reported to the U S. municipal department and therefore exclude fire reported only to Federal or state agencies or industrial fire brigades. Fire in which the extent of flame damage was unknown or not reported have been allocated proportionately among fires with known extent of flame damage. Property damage figures have not been adjusted for inflation. Fires are rounded to the nearest ten and property damage is rounded to nearest hundred dollars. Sums may not equal total due rounding errors. There are defin There are definite cost benefits for properties that can be as a direct result of fire sprinkler installation, but, what is the cost benefit analysis with respect to saving lives The NFPA has kept statistics on large loss-of-life incidents for the last decade and has found that: NFPA has no record of a fire killing more than two people in a completely sprinklered building where the system was properly operating, except in an explosion or flash fire or where industrial fire brigade members or employees were killed during fire suppression operations. (NFPA, 2003) The following table shows that figure in a clearer scale: Table 6.1: Estimated Reduction in 1999 Civilian Death per Thousand Fires Due to Sprinklers, in Property Classes [National estimates based on 1999 NFIRS and NFPA Survey] Date reported in Version 4.1 as sprinkler status unknown was converted to no-sprinkler. It was necessary to use pre-1999 data to estimate what fraction of the 1999 fires coded as non-sprinkler really were no sprinkler. The conversion of data reported in Version 4 converted all fire where sprinklers operated to other/unclassified. It was necessary to use pre-1999 data to estimate what fraction of the 1999 fires coded as other operation were really sprinkler operated. These are fire .reported to U S. municipal fire department and so exclude fire reported only to Federal or state agencies or industrial fire brigades. Fire statistics do not include proportional shares of fires with sprinkler status unknown or unreported. Fires are estimated to the nearest hundred. Sums may not equal total due rounding errors. Total includes fires in properties without high occupancy, such manufacturing and storage properties. The NIST (National Institute of