1. Should the taxing authority always agree to provide a private revenue ruling requested by a taxpayer to clarify the tax treatment of a proposed transaction? Should taxpayers requesting rulings be...

1. Should the taxing authority always agree to provide a private revenue ruling requested by a taxpayer to clarify the tax treatment of a proposed transaction? Should taxpayers requesting rulings be assessed a fee to cover the taxing authority’s cost of responding?

2. Assume you are an individual taxpayer. If you expected your marginal tax rate to decline in the next period, what tax planning might you undertake in the current period?

3. Suppose the United States were to convert its tax system from an income tax to a flat tax. For individuals, there would be no itemized deductions allowed, a high standard exemption (thus low-income taxpayers would not have to file returns), and tax exemptions for dividend and interest income. Businesses could deduct all expenditures on salaries and immediately expense asset acquisition costs. Would such a tax system eliminate incentives to shift activities?

(a) from one period to the next,

(b) from one type to another, and

 (c) from one pocket to another?

Do you believe a flat tax with no itemized deductions is politically feasible in the United States?