I’m studying and need help with a Accounting question to help me learn.
Discuss a tax law that Congress created for either an economic purpose or a social/equity purpose, and explain whether you think the law is appropriate. If there are ways you would recommend changing the law please explain(60 words and need help responses two students 30 words each)
How has Congress’s implementation of the American Rescue Plan tax credits contributed to the government’s social agenda?
While the idea of tax expenditures on the surface may make the federal government appear to be philanthropic, in actuality, the government uses taxes and their related tax credits and deferrals as just another means of influencing social policy to better match a specific agenda.
The COVID pandemic and its slew of social issues acts as a perfect example of this interconnected relationship between tax and social policy. By way of that, one of the more relevant items in the current environment has to do with the American Rescue Plan credit. While the tax credit provides for a host of different applications, one of the newest variations of the credit allows for employers to earn a tax credit for paid time off given to employees who took leave due to the COVID vaccine. In other words, if an employer had to pay their employees in the form of paid time off because of the employee getting the COVID vaccine, the employer will receive a deduction on their tax liability, or in the case of exceptionally low tax liability, a tax refund altogether.
It should go without saying that more people will go to get the vaccine under the American Rescue Plan as the traditional barrier of work obligations is taken out of the equation. Despite one’s personal political beliefs, this then, in turn, would allow for a greater proportion of vaccinated individuals which would decrease the rate of infection and mortality. That is to say, through enacting a tax advantage to getting vaccinated, more individuals will go to get the vaccine, which meets the government’s social agenda of protecting the public from COVID.
Personally, I believe that establishing a tax advantage to incentivize getting vaccinated is a great idea, and the implementation of the credit is logically sound given the government’s objective. While it is unlikely that the government would ever force the public to get vaccinated, the use of tax credits such as the American Rescue Plan allows for those who would not otherwise be interested in the vaccine to be coaxed into protecting themselves and others.
Is it immoral for the government to establish a tax law with the sole purpose of “tricking” people into getting vaccinated?
Does the tax disenfranchise those who cannot get vaccinated?
Is what is the educator expense deduction and why is it necessary?
The AICPA defines in their Guiding Principles for Tax Equity and Fairness that tax deductions and credits are provided to taxpayers as an attempt to achieve horizontal equity, which is defined by taxpayers with equal amounts of income paying the same amount of tax. These credits and deductions apply to a wide range of contributions and professions in order to positively impact social objectives and equity, among other things. The educator expense deduction allows educators to deduct up to $250 per educator for unreimbursed business expenses, according to IRS.gov. The IRS includes that this deduction is found on form 1040 or 1040A and is available even if the educator does not itemize their deductions. It is available to any educator or school aid working with grades between kindergarten- 12th grade and can be used for classroom supplies or related training.
This deduction is similar to other business deductions in the fact that it can be used to provide tax benefit for necessary business expenses. The IRS likely implemented this deduction to aid teachers in providing increased support to their classrooms. It is widely known that teaching elementary- high school is not a very high paid profession. It is also generally true that most teachers put back in a substantial amount of money into creating welcoming classroom environment and providing supplies to help meet the needs of students who may not have a lot. Many would agree that these are some of the teachers’ most important tasks. The policymakers likely noticed this and used this deduction to incentivize educators to continue to enter the profession and do the necessary work.
I believe that this deduction is justified. In my experience with educators it is evident that most spend a greater amount than $250 each year on their students and classroom and a positive learning experience and environment generally ends up benefiting society. Do you see the necessity in this deduction? Do you think an increased allowed deductible amount would be justified?
I also used:
Guiding Principles of Tax Equity and Fairness. (2007). American Institute of Certified Public Accountants.