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Federal Income Tax: Too complex? Bonus Depreciation work?

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1. Many people believe that the federal income tax is far too complex. But are there good reasons for this complexity? Provide an example of complexity in the Federal individual income tax code and describe the reason lawmakers included the provision in the tax code. Do you believe complexity is a necessary part of the internal revenue code? Explain your answer.

2. The government allows first year expensing under §179 and bonus depreciation. Why are these provisions included in the Internal Revenue Code? Do you believe the inclusion of these provisions achieved the goals of Congress? Why or why not?

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1. Complexity is not needed to raise revenues. We could all just paid a flat percent of gross income and have NO deductions. That would be simple and effectively raise the taxes needed to run the government. In fact, flat tax has been a splinter group trying to promote such a program. Why is this not likely to happen? The government uses the tax code to promote and encourage behaviors that it would like to incentivize. That is, it is an instrument of social engineering. When car sales were slumping during the recession and they wanted to improve the economy, the US government came up with "cash for clunkers." This gave a tax credit to certain individuals who bought certain cars within a certain time frame. So, now everyone had to "test" to see if they qualified, if the ...

Solution Summary

Your discussion is 529 words and a reference to understanding section 179 and bonus depreciation.

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Attached you will find the PDF documents to some practice study problems that I am still trying to grasp and understand. These are the ones that I did not know how to do. Your help is greatly appreciated.

Chapter 8: practice problem 25 on PDF document page 234

Chapter 21: practice problem 8 on PDF document page 595

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