Reference no: EM13732648

Assignment 2: The Federal Income Tax Base and Policy Alternatives

There are proposals to change the U.S. federal tax system from primarily an income base to a consumption base. One popular proposal comes from Cornell economist Robert Frank. You may explore his proposal in the video titled, "Robert Frank: Consumption Tax", located at https://www.youtube.com/watch?v=1ZYVCgHsjec. Because of the difficult transition from one base to the other, the income base has prevailed. Assuming that the federal government continues using income as the tax base, politicians and economists have considered the following changes to the tax code:

Expanding or eliminating the Alternative Minimum Tax (AMT).
Expanding the base to include taxation of employer-provided health insurance.
Eliminating the interest deduction on owner-occupied housing.
Use the Internet or Strayer databases to conduct further research on the aforementioned proposed changes to the tax code.

Write a six to eight (6-8) page paper in which you:

1.Evaluate the efficiency and fairness of the following:

Changing the AMT by expanding it or eliminating it. Predict two (2) of the probable consequences of such an option.
Counting employer-provided health insurance as money income. Predict two (2) of the probable consequences of such an option.
Eliminating the interest deduction for owner-occupied housing. Predict two (2) of the probable consequences of such an option.
2. Rank the proposed tax code changes from most fair to least fair (one [1] being the most fair and three [3] being the least fair). Provide a rationale for your ranking.

3.Compare the three (3) proposed changes in terms of political attractiveness. Since increasing taxes is universally unpopular, predict the likelihood of political support for each proposal. Provide a rationale for your response.

4.Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other similar Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:

Examine the unique nature, functions, and role of public financial management.
Assess the impact of budget deficits / surpluses and national debt on public finance, and strategies for managing these issues.
Analyze current problems of social security and welfare systems, and formulate alternatives for changes in managing these systems.
Analyze the economic impact of the tax system in the U.S.
Use technology and information resources to research issues in public finance.
Write clearly and concisely about public finance using proper writing mechanics.
Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric found here.