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A Seldom Considered Aspect of Tax Fairness and Simplification: The Need for a Coherent Policy Perspective on the Many and Varied Dollar Limitations Contained in the Internal Revenue Code


Richard J. Kovach


University of Akron - School of Law


Pittsburgh Tax Review, Vol. 1, No. 1, 2003

Abstract:     
The I.R.C. contains numerous dollar limitations that categorize taxpayers for dispensation of a wide variety of tax benefits and burdens. These limitations, haphazardly evolved over many years, include the dividing lines for rate brackets and scores of economic markets that indirectly define poverty, affluence, and wealth while determining eligibility for a host of exclusions, deductions, and credits pertaining to income assistance, retirement savings, small business relief, education, capital formation, and other national concerns.

Unfortunately, no unifying policy for the setting of dollar limitations exists. An arbitrary mishmash of tax-determining standards hinders compliance and planning efforts. Additionally, inconsistent dollar limitations complicate political debate and weaken the socializing effects of taxpayer categorizations while lessening fairness in the Code necessary to support voluntary reporting.

One way to remedy the failure to create cohesive standards for setting dollar limitations would involve setting rate brackets through statistical or other objective criteria, then converting bracket limits into a universal dollar limitation that, with some room for variations, would replace most of the uncoordinated limitations now in the Code. This article explores how to develop a universal limitation and why it could sharpen political debate, promote social cohesiveness, and place the burden of revenue effects adjustments on more appropriate Code features like rate determinations.

Number of Pages in PDF File: 42

Keywords: tax, tax policy, tax code, internal revenue code

JEL Classification: K34, D3, E62, H2

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Date posted: November 2, 2004  

Suggested Citation

Kovach, Richard J., A Seldom Considered Aspect of Tax Fairness and Simplification: The Need for a Coherent Policy Perspective on the Many and Varied Dollar Limitations Contained in the Internal Revenue Code. Pittsburgh Tax Review, Vol. 1, No. 1, 2003. Available at SSRN: http://ssrn.com/abstract=606523

Contact Information

Richard J. Kovach (Contact Author)
University of Akron - School of Law ( email )
150 University Ave.
Akron, OH 44325-2901
United States
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