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Summarize the sources and objectives of modern income tax statutes. Compare and contrast GAAP and tax accounting. Explain why they are different.

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1. Summarize the sources and objectives of modern income tax statutes.

2. Compare and contrast GAAP and tax accounting. Explain why they are different.

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The expert summarizes the sources and objectives of modern income tax status.

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1. Summarize the sources and objectives of modern income tax statutes.

As discussed in the previous responses, income tax is a part of the fiscal policy of the economy. This type of tax is most popular since ancient times. In modern times, UK levied this for the first time to fight against Napoleon than made the income tax permanent since 1874. In US, Philadelphia was the first to impose the income tax.
The flat taxation system in US was replaced with progressive taxation system.
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The sources of the modern income tax statutes are:
• Custom
• Court decisions
• Case laws
• Legislation of Federal government
• Constitutional Provisions
• International Taxation laws

Objectives of income tax statutes are:
• To raise resources for the government
• To reduce the inequalities of income in the economy
• To promote the balanced development
• To give thrust to the strategic sectors of the economy for economic development

Different strategies
As discussed in the previous response, If the economy is in recession then the tax credit and tax cuts will increase the disposable income and hence thus increase the overall production of the economy. It will help in recovery of the economy. But one has to take care that increase in the disposable income should not be wasted on the conspicuous expenditure but utilized for the essential consumption expenditure. Then only it can lead to increase in the employment, which will lead to increase in real growth in national income. If the economy is overheated then the reverse strategy can be employed.

Other changes to fiscal policy should be simultaneously pursued, that would have been more successful:
Public spending: It is the most potent weapon to raise the consumption and to increase the economic growth. Increased government expenditure will open new job opportunities in the economy, which means creation of demand for ...

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