![]() The real measure of the fairness of a progressive tax system is not the tax brackets. Such measures are called “tax expenditures” or “tax subsidies.” When the government forgoes income taxes because of special deductions or credits, it has the same fiscal effect as a direct subsidy. For example, deductions for intangible drilling costs (which would ordinarily be capitalized) are an effective government subsidy for oil and gas exploration. Taxable income is gross income reduced by deductions and exemptions of many kinds.Ĭongress has used the tax system effectively as a device for “off-the-books” government subsidies rather than direct expenditures. The progressive income tax is imposed on taxable income. The tax brackets are based on taxable income, not gross income. 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).12% for more than $10,275 ($20,550 for married couples filing jointly).22% for more than $41,775 ($83,550 for married couples filing jointly). ![]()
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