Final answer:
Federal tax laws are created or changed through a legislative process that begins with the proposal reflecting current economic and social objectives, followed by Congressional approval, and culminating with Presidential assent. Significant changes can cause political debate due to their impact on income distribution. Historical examples include the Revenue Act of 1942 and the implementation of the 16th Amendment.
Step-by-step explanation:
Before federal tax law is formed or changed, a series of legislative processes must occur. Initially, tax law proposals are typically crafted according to the social and economic goals of the current administration, taking into account principles such as equity, simplicity, and efficiency.
The proposal then goes through the legislative process where it must be approved by both the House of Representatives and the Senate.Following Congressional approval, the proposal is presented to the President for signing into law.
If the president approves, the tax law is enacted. However, any significant tax law change, such as introducing a new type of tax like a value-added tax, altering rates for individual income taxes, or creating more progressive tax brackets, would provoke considerable political debate due to the impact on income distribution.
One notable change in tax law was the Revenue Act of 1942, which was crucial in transforming the nature of taxation in the United States during wartime. Ultimately, the entire process reflects the government's need for revenue, as seen historically with the first federal income tax during the Civil War, and the ratification of the 16th Amendment which authorized an income tax specifically in the Constitution.