TRUE OR FALSE. Justify (briefly) your answer. (a) “Tax Holidays,” temporary redu
ID: 1151555 • Letter: T
Question
TRUE OR FALSE. Justify (briefly) your answer.
(a) “Tax Holidays,” temporary reductions in the corporate tax paid on corporate income repatriated from abroad, are an effective way to tax corporate profit held overseas by multinational corporations.
(b) According to the Haig-Simon concept of income, expenses incurred generating income should be deducted when calculating taxable income.
(c) Relative to a matching grant, a block grant increases local spending on a targeted good more.
(d) Health Savings Accounts (HSAs) allow people to save for medical expenses pre-tax; expenses paid out of this account are deducted from taxable income. This provides a large benefit to low income workers, and allows them to more easily afford medical care.
(e) If bequests are accidental, then taxing inheritances is undesirable.
(f) The Tiebout theorem says that a public good such as clean air can be efficiently paid for and provided with local district provision.
Explanation / Answer
a. True. This is because tax holidays and reduction in corporate tax paid on corporate income repatriated from abroad means that the govt. is indirectly favoring the capital held within the domestic boundaries, and thus the profit held abroad is not treated with the same benefit as the profits held within the domestic borders.
b. False. According to Haig-Simon concept of income, any expenses incurred generating income should "not" be deducted when calculating taxable income.
c. False. A block grant is a grant given by the Federal Govt. to the Local Govt. with only a generalistic provision, whereas a matching grant is more of a targetted grant which is given by the Federal Govt. to the local govt. for a specific project or expenditure.
d. True. The funds from this account may be used to pay prescribed medical expenses at any time without federal tax liability or penalty
e. True. This is because taxing inheritances in this way is like taxing someone's wealth, even if the wealth is accidental
f. False. Tieabout theorem says that the competition across local jurisdiction encourages competition between the two local municipalities on the public provision of local goods such that these local governments are able to provide the optimal level of public goods.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.