Final answer:
In tax research, crucial factual issues include federal income tax assessment, the array of taxes payable, and the IRS's role, as well as how tax laws shaped by politics affect the economy. Taxes should meet criteria of equity, simplicity, and efficiency, with debates over tax policy demonstrating the dynamic nature of tax legislation.
Step-by-step explanation:
Types of Factual Issues in Tax Research
When conducting tax research for a case, certain types of factual issues are critical. These include the assessment of federal income taxes, the variety of taxes individuals and businesses may need to pay, and the impact of government policies on the economy. An important factual issue is understanding the functions of the Internal Revenue Service (IRS) and how tax laws, influenced by politics, can shift over time in response to social and economic goals. Moreover, the economic impact of taxes on growth and productivity, the equity and incidence of a tax, and principles such as the benefit principle and ability-to-pay principle are pivotal points of examination.
To achieve effectiveness, taxes should adhere to the criteria of equity, simplicity, and efficiency. These criteria ensure that people understand taxation, partly determining its reception and effectiveness. For instance, equitable taxes are perceived as fair, simple taxes are understood by taxpayers, and efficient taxes are easy to administer and comply with, minimizing costs for both the government and taxpayers.
Historical and current issues, such as debates over tax brackets, value-added taxes, or flat taxes, showcase the shifting landscape of taxation policy. A controversial example includes the debate over the permanence of tax cuts initiated during President George W. Bush's term. The concept of taxation's influence on labor supply is also significant, as it relates to decisions made at the margins – i.e., the marginal tax rate rather than the average tax rate.