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August 30, 2005
Tax Class, Day 1
Today was the first day of tax class, ACC375. One of the first points the instructor (Dr. Bob Kilpatrick) made was one that should be familiar to anyone who has ever filled out a tax return: one should not expect tax law to follow any logical pattern. There may have been some underlying rationale in the beginning, but at this point, it's all politics. A good example of this is the "sunset" provision of the estate tax, whereby the tax goes down, then goes away entirely in 2010, then comes back in 2011 -- but to where it was in 2001, not 2010. This was the compromise that was reached in order to get the tax eliminated. Presumably, Congress will enact a permanent elimination before 2011 -- but who can say for sure?
Another point of confusion resulted from the discussion of progressive, proportional, and regressive taxes. In popular parlance, a regressive tax is one that taxes a higher percentage of your income if you're poor and a lower percentage of you're rich (e.g., the sales tax). But in tax class, a sales tax is considered proportional, because it's not your income we're considering as the tax base -- it's the dollars being taxed. A "regressive" tax, in the formal sense, is much less common -- something like the FICA Social Security tax, or similar "capped" levies.
Posted by Urbie at August 30, 2005 04:48 PM