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When it comes to tax law many tax payers find this topic quite a complex one to approach. This is due to the two factors that make this process be somehow complex in its displaying: using tax code for other purpose than raising revenue and the process of feedback to amend this code.
This code is intended mainly to ensure certain revenue for the federal government, but also to guide businesses and individuals in achieving their economic and social goals. How can this be? Well, let's see; there is for instance this tax deduction applied to those who pay mortgage interest in the purpose of encouraging home ownership.
Taking this thing from its theoretical perspective, a tax law applied to income won't fall within deductible issues, mostly because this is not an expense taken from one's acquired income. One problem that arises from this type of deduction is considered by many tax payers as a discriminative act against those who rent their home. The payment of the rent is not deductible.
The tax code that government uses on their tendency of running a social policy seems as one that hasn't its own organizing principle. Over time this issue grew more and more in its incoherence as long as various legislations and regulations have succeeded interfering with the existing law, bringing changes to it as well.
These things go as follows: supposing that Congress issues a tax credit in the purpose to encourage a specific type of activity. Thus many of the taxpayers operating in the same activity would re-organize their businesses in order to take advantage of the tax credit, qualifying as such for the credit.
In response, Congress would amend the code in such a manner that many restrictions would be added along with targeting that credit in a more efficient manner. This will draw taxpayers to attempt in claiming additional benefits managing to use this change into this respect. So Congress will try to find another tax law for being enacted, and so on. In this way more complexity is defined with every different tax code that is issued.
Generally speaking, income tax in USA is progressive as one can see from the figures of 2010 when tax payers (the top 1% of individuals) paid almost 23% of federal taxes and those figures of top 5% revealing a payment of approx. 39% of all the federal taxes. The 20% of taxpayers at the bottom of this pyramid paid a little more than 1% of the federal taxes.
More than this, this progression is seen as increasing for the last decades across USA territory since with 1980 there were 20% of tax payers paying approx. 56% of the taxes, to rise at 65% in 2010.
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