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Chapter 1 ACCT 408 - Competing objective result in a complex law structure *Raising revenue *Economic considerations *Social considerations *Equity (Fairness) considerations *Politicial considerations * Raising Revenue *Fund the cost of government operations (Primary function of a tax system *In a perfect world, taxes raised by the government would equal the expenses incurred by government operations - Economic considerations *Control the economy (example: favorable depreciation deductions for purchase of business property) *Encourage certain activities (example: research and development deductions and credits) - Economic considerations *Encourage certain industries (example: special tax treatment for agriculture activists, development of natural resources, railroad and banking industries) *Encourage small business (example: ordinary loss deduction on stock in small business) - Social considerations *Tax-free medical coverage provided by employers to encourage health insurance *Tax benefits to encourage additional education and to encourage adoption - Social considerations * Deduction of contributions made to qualified charities, to encourage funding of socially desirable programs by private individuals and companies *Disallowed dedications for expenditures against public policy (Example: illegal bribes and kickbacks) - Equity considerations Political considerations *Special interest legislation *Political expediency *State and local government influences 1.
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