Discussion Question 1-48 Multiple Justification for Several Tax Provisions (LO.

Question

Discussion Question 1-48 Multiple Justification for Several Tax Provisions (LO. 7) Some tax rules can be justified on multiple grounds (e.g., economic and social). In this connection, indicate which of the following are possible justifications for the rules governing the following. Select "Yes or No", whichever is applicable. a. Pension plans. Private retirement plans are not encouraged, since they compete with the Social Security system. SelectYesNo When an employer makes a contribution for an employee to a qualified pension or profit sharing plan, that contribution and any income it generates are not taxed to the employee until the funds are distributed. SelectYesNo b. Education. The various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education can be justified on both social and economic grounds. SelectYesNo The education tax incentives cannot be justified on both social and economic grounds, since they benefit only the individual. SelectYesNo c. Home ownership. Providing renters with a Federal income tax benefit for the rent they pay encourages home ownership. SelectYesNo Allowing homeowners to deduct interest on their home mortgages encourages home ownership. SelectYesNo

Explanation / Answer

yes yes no yes

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