Please prepare a brief essay (typical length 5 pages) that responds to question 1A or to question 1B (but not both!)

1A) The US Federal Income Tax system has often been criticized for it complexity. Are complicated rules necessary in order to measure and tax income? Please identify a particular feature, or group of rules, among those we have studied thus far in the course that you think is difficult to understand and to apply. Describe the feature/rule-group and explain its purpose. Why was this made part of the tax system, and how does it create a benefit or block a loophole? Finally, evaluate whether the difficulties are necessary because of the nature of the benefit or loophole. Is there a simpler way to achieve the same result?

1B) The Republic of Fredonia is a small, imaginary country in Eastern Europe, which was in the former Soviet sphere of influence until 1991. The current government of Prime Minister R.T. Firefly (Democratic Capitalist party) is committed to tax reform, and plans to institute a progressive income tax with three brackets of 15%, 30% and 45%. The reformers are not sure how to handle issues involving taxation of families, and have asked you to prepare a *brief* memo explaining which aspects of the US system for taxing families (i.e. the concepts and rules regarding filing status, dependency exemptions, and credits for children, child care and low earned income) should be considered as models for Fredonia's new system, and which aspects should be avoided.

For background, see http://encyclo.findlaw.com/6050book.pdf at pp. 10 to 16 of 26