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Issues in Federal Income Tax Complexity.

Introduction

According to the American Institute of Certified Public Accountants (AICPA), the biggest problem that taxpayers are faced with today is complexity [10]. A symptom of the problem, the Internal Revenue Service (IRS) now publishes over 450 different tax forms annually, which translates into eight billion pages of forms and instructions being distributed each year. Over 17,000 pages of IRS laws and regulations confront citizens intent on complying with their constitutional obligation to pay taxes [9]. In 1998, the IRS estimated taxpayers would spend an average of 11 hours and 34 minutes filling out their tax return, an increase of over 2 hours from just 10 years earlier [7]. It is not surprising, then, that each year about one-half of U.S. individual taxpayers seek professional help when filing their returns [9].

Several explanations have been offered as to why our laws are so complex, including:

* an interest by Congress to make the system fair to more taxpayers;

* a need to prevent smart lawyers from finding loopholes that enable big money to escape taxation;

* a desire to subsidize favored programs without hiking taxes; and

* an attempt by legislators to give tax favors to special interest groups [3].

Inevitably, legislation aimed at ensuring equity in taxpayer treatment tends to further complicate matters. As noted by William Stromsem, an AICPA tax director, "simplicity and fairness are tradeoffs. The fairer you make the tax code the more complex it becomes. The simpler you make the tax code, the rougher the justice" [10].

A number of alternatives have been proposed as replacements for our current tax system, including a national sales tax, a value-added tax, and several versions of a flat tax. But despite these proposals and other persistent calls for reform, it is doubtful that the current federal income tax system will be scrapped soon, for a variety of reasons. Elected representatives who serve on Congressional tax committees have at best limited financial incentive to push for substantial revision of the present system. Members of these committees comprise only about 10 percent of Congress, yet they receive approximately 25 percent of the political action committee (PAC) money, primarily because these PAC donors seek to influence tax policy [2]. Likewise, many taxpayers do not favor significant change, as suggested by an AICPA survey conducted in 1995. This study found that approximately three-fourths of the respondents did not want to lose their deductions for home mortgage interest, charitable contributions, and state an d local taxes, expenses that many of the proposed alternatives would disallow [13].

Complexity

Tax complexity has many facets. One problem is that there is little consensus as to what constitutes or causes tax complexity. Indeed, what is considered complex can depend on a taxpayer's wealth or other status:

For low-income households, headaches can arise from issues regarding filing status, abandoned spouses, dependency tests, the child and dependent care credit, and the earned income tax credit. For individuals with higher income, complexity arises in itemizing deductions, the treatment of capital income (particularly capital gains, interest deductions, and passive losses), and the alternative minimum tax. For small business owners, issues relating to inventory, depreciation, and distinguishing various expenses can be complicated [5].

According to the accounting firm Deloitte and Touche LLP, a number of elements influence taxpayer perceptions of complexity. These include substantial recordkeeping or reporting requirements, frequent changes in the law or reporting requirements, numerous legal or factual distinctions, alternative treatments of similar items, uncertainty in the law, and mechanically complex calculations [4]. Similarly, Michael Mares, chair of the AICPA Tax Executive Committee, identified an extensive list of factors that can cause complexity:

* the effects of change;

* subjectivity;

* lack of consistent concepts;

* structural complexity;

* the effects on taxpayers not targeted by a particular provision;

* forms;

* administrative issues;

* transactional application and business dynamics;

* diffusion of responsibility;

* inconsistent application of rules; and

* the legislative process [14].

Numerous attempts have been undertaken in the past to measure complexity. Some of these efforts have looked at the taxpayer, while others have focused on the preparer. Almost all of these studies have used a different measure or definition of complexity. Frequently these models have included a count of forms or schedules filed by individual taxpayers [e.g. 1,6], while others have considered the number of Internal Revenue Code sections or regulations that impact the tax return [e.g. 8,12]. A more recent effort utilized the estimated preparation times found in the instructions accompanying most tax forms as its basis for measuring complexity [11].

Any limitations associated with these studies do not lessen the importance of identifying those provisions that cause the most complexity. As stated earlier, it is unlikely that our current income tax structure will be abandoned. Thus, if a concerted effort is undertaken to simplify the tax law, it is very possible that only a few provisions will be changed. However, many taxpayers and professionals alike would probably agree that even some simplification, no matter how limited, would be beneficial. According to Mares, the following problems arise from having too much complexity, with the ultimate effect being the erosion of voluntary compliance:

* perception of unfairness -- the tax law is perceived by many as unfair;

* difficulty of administration -- it is difficult for the IRS to administer the tax law;

* compliance costs -- the cost of compliance for all taxpayers is increased; and

* interference with economic transactions -- complexity interferes with economic decision-making [14].

Present Study

In order to gain a better understanding of the complexity level of today's income tax system applicable to individuals, two similar surveys were administered to groups of tax practitioners and educators from across the nation. These professionals were asked to comment on several general substantive topics including:

* the overall complexity level of today's laws;

* how the level of complexity has changed since the Tax Reform Act of 1986, the last major reform legislation enacted by Congress;

* how the level of complexity might be expected to change in the future;

* whether complexity remains a significant issue today with the general public; and

* whether complexity remains an important issue today with Congress.

In addition, those surveyed were asked to judge the complexity level of 39 common provisions. Although most of these items were taken directly from Form 1040 and Schedule A (pertaining to itemized deductions), several others were included that could also affect the overall complexity of a return. The survey incorporated many of the same provisions that were found in earlier complexity studies (where the particular rule still exists today). Respondents were asked to rank each of the 39 items as being not complex (simple), somewhat complex, moderately complex, very complex, or extremely complex. These professionals were also asked how complexity could best be measured or defined, with several alternatives again coming from prior studies. The educator survey was administered electronically (via e-mail), while the practitioner survey was mailed.

Data Summary

Practitioners. In total, 206 practitioners from a sample of nearly 900 AICPA members responded, for a response rate of approximately 23 percent. A large majority of the practitioners were employed in public accounting (71 percent), while 20 percent worked in private business and 7 percent were employed by governmental or not-for-profit agencies. In addition, most (76 percent) held an accounting-related management or ownership position with their firm. All respondents were certified public accountants (CPAs), and slightly over one-third had advanced degrees (masters of tax or accounting, 31 percent; juris doctor, 4 percent; and masters of law, 2 percent). A large percentage of those who responded (73 percent) had at least eleven years of full-time tax work experience, and almost 80 percent of the participants reported that they regularly prepared or reviewed returns for individuals. A significant majority (82 percent) of the practitioners who returned the survey were men.

Educators. In total, 180 educators out of a national sample of nearly 500 tax academicians responded, yielding a response rate of 36 percent. Thirty percent of the respondents held the rank of professor, while 39 percent and 26 percent were associate professors and assistant professors, respectively. A slight majority (51 percent) had either a Ph.D. or D.B.A., as compared to 30 percent with a masters degree and 19 percent with law degrees (including nine percent with a L.L.M.). Seventy percent of the respondents had over 10 years of teaching experience, while another 21 percent had taught for at least 6 years. A substantial majority (85 percent) of participants indicated they regularly teach an undergraduate individual tax class, and 15 percent teach a comparable graduate course. Almost 90 percent of the educators were CPAs, and a significant percentage of respondents had public (81 percent) and private (55 percent) accounting experience. Over 60 percent of the educators currently prepare tax returns for othe rs. One-third of the educators who responded were women.

This demographic information reasonably supports the notion that the survey participants are very knowledgeable about the field of taxation, given their academic background, professional certification, and work experience. Their responses to the substantive questions have been tabulated and the results are summarized on the following page.

As Table I reflects, the vast majority of practitioners (93 percent) and educators (90 percent) believe that today's federal income tax law is at least moderately complex. In fact, "very complex" was the most common response given by both practitioners and educators, and no one considered the law to be simple. Table II shows that a large majority of both practitioners (89 percent) and educators (86 percent) think the tax law has become more complex since the passage of the Tax Reform Act of 1986, legislation that was originally touted as a simplification measure. Further, a significant majority (70 percent) of the tax accountants and a similar proportion of educators (74 percent) expect the law to become even more complex, as is reported in Table III. Less than 10 percent of those in either survey group believe the burden will lessen in the future.

Despite their concern over the present state of the tax law and dire projections for the future, these professionals do not believe that Congress views complexity with as much disdain as do taxpayers. As Tables IV and V suggest, both practitioners and educators generally believe that taxpayers think complexity is a more important issue than does Congress.

As mentioned earlier, researchers have typically not employed a consistent measure of complexity when conducting their studies. Such an ad hoc approach makes. it difficult to determine how proposed or new legislation might impact the burden placed on taxpayers. A logical step in this line of research is to find a mutually agreeable definition that could provide a consistent basis for future measurement and comparisons Participants in this study were asked their opinion as to how best to define or measure complexity. Table VI provides a summary of the responses in percentage terms. As is shown, the most commonly identified element of complexity among practitioners was the number of laws and regulations involved, followed by a taxpayer need to consult a tax professional and the likelihood of significant preparer confusion. Educators identified these same three measures as the most appropriate signs of complexity, although in reverse order from the practitioners.

Finally, both educators and practitioners were asked to rate the level of complexity for each of 39 specific tax provisions using the following scale: 1 = not complex, 2 = somewhat complex, 3 = moderately complex, 4 = very complex, and 5 = extremely complex. From these responses, a weighted average was calculated for each item. Table VII shows this average and the rank of each item, listed in order from most complex to least complex from the viewpoint of the practitioners. Table VII also reveals the percentage of respondents who rated a particular item as not complex, somewhat complex, etc. Table VIII discloses the same information for the educator group. Note that percentages have been rounded and thus do not always equal 100 percent.

Table IX provides a comparison of both groups as to the weighted average and rank assigned to each provision. As is shown, some differences of opinion do exist between the two groups. In most cases (i.e., for all but the kiddie tax, moving expenses, tax rate schedule, and state and local taxes), educators tended to rank an item as being more complex than did their counterparts in practice.

Table IX also clearly discloses that three provisions were considered by both educators and practitioners to be, at a minimum, very complex (defined to include those with an average rating of 4.0 and above). Specifically the AMT, passive activity losses, and the at-risk rules were judged to be the most complex. In addition, a considerable number of items were determined to be at least moderately complex (i.e., a weighted average of at least 3.0 but less than 4.0) by both groups, including supplemental income and loss, other gains and losses, IRA etc. distributions, kiddie tax provisions, vacation home rules, capital gains and losses, self-employed provisions, depreciation, hobby losses, phase-out of itemized deductions, and casualty losses. Educators also found several other items to be moderately complex: employee business expenses, earned income credit, social security, investment interest expense, education credits, and IRA contributions. At the other end of the complexity spectrum, both survey groups agre ed that the following items were relatively simple (i.e., having a weighted average of less than 2.0): state and local taxes, real estate taxes, wages, salaries and tips, and the standard deduction.

Statistical Analysis

As mentioned, Table VI provides a summary (in percentage terms) of the responses to the question of how income tax complexity is best defined or measured; these percentages were ranked for both groups (in order from greatest to least by practitioners). A Wilcoxon signed-rank test was computed to test the null hypothesis that the rankings of practitioners and educators were equal. The results were not statistically significant at a level of 0.05, and thus there was no statistical difference in the practitioner's and educator's ranking on the measurement issue. The Spearman's rho correlation coefficient for ordinal data was also calculated; the test statistic was found to be .972 and was significant at the .01 level (2-tailed). This provides further support for the finding of general consensus between the groups.

The differences of opinion between the practitioners and educators as measured by the mean of each tax provision (previously summarized in Tables VII and VIII) was tested using the t-test. The null hypothesis tested was (H0 [[micro].sub.practitioners] = [[micro].sub.educators]), or that there was no difference in the mean ratings for the individual items. It should be noted that the null hypothesis was used to test only the 19 most complex items (considered by the authors to be of the most concern). A significant difference was found for most of these items at a significant level of 0.05. However, no difference was found for three of the provisions: supplemental income and loss, the kiddie tax, and casualty losses.

Also considered from a statistical perspective was the potential difference in the distribution of the proportions between practitioner and educator respondents for each provision. As part of this analysis, a Chi-square test was performed. In essence, this test measures the goodness-of-fit of frequencies between the practitioner and educator responses. The null hypothesis in this case was that there was no difference in the distribution of proportions for each question. The null hypothesis symbolically is [P.sub.practitioner,i] = [P.sub.eduator,i] for all i = 1, 2, 3, 4, 5. The i represents the ordinal scale in the questionnaire, where 1 = not complex, 2 = somewhat complex, etc. A significant difference at the 0.05 level was again found for most of the provisions. Frequency distributions were not statistically different, however, for responses relating to the at-risk rules, supplemental income and loss, kiddie tax, and IRA contribution deductions. (Note: for some of the responses there was an expected frequen cy of less than 5. In these cases, the likelihood ratio statistic was used, and also some of the categories were collapsed; i.e., response categories 1 and 2 were recoded as a 2, and response categories 4 and 5 were recoded as a 4.)

Conclusion

Findings from this study support the widely held belief that our tax laws are extraordinarily complex, which should be great cause for concern because of its adverse effect on voluntary compliance.

While it is unlikely that major reform will take center stage as progress by Congress is made on any new tax bills, the interest shown by both major political parties provides the government with an opportunity to move towards simplification. There is considerable agreement as to which provisions are the most culpable. Let us hope that our elected leaders take every opportunity to reduce not only the financial burden of our tax system, but also the compliance burden imposed upon the citizenry.

About the authors:

Tom Davies is Professor of Accounting at the School of Business, University of South Dakota in Vermillion.

Jon Carpenter is Professor of Accounting at the School of Business, University of South Dakota in Vermillion.

Gene Iverson is Professor of Statistics at the School of Business. University of South Dakota in Vermillion.

References

(1.) Clotfelter, Charles T., "Tax Evasion and Tax Rates: An Analysis of Individual Returns," The Review of Economics and Statistics, 362-373, (August 1983).

(2.) "Congress Loves Tax Complexity," The Christian Science Monitor, 9 (August 27, 1997).

(3.) Francis, David R., "Scrap Tax Code? It's Not So Easy," The Christian Science Monitor. 8, (March 9, 1998).

(4.) "Fundamentals of Tax Reform/Consumption Tax Proposals," Online, http://www.dtonline.com/taxref/trcontax.htm

(5.) Gale, William, "Why are taxes so complicated? and What can we do about it?," Brookings Review, 36, (Winter 1999).

(6.) Internal Revenue Service, "A Cross Section Regression Model of Audit and Non-Audit Factors Affecting Taxpayer Compliance," Unpublished Planning and Analysis Division Staff Paper, (1970).

(7.) "Itemized Headache," Forbes, 64 (April 5, 1999).

(8.) Karlinsky, Stewart S. "Complexity in the Federal Income Tax Law Attributable to Capital Gain and Loss Preference: A Measurement Model," Ph.D. dissertation, New York University, (1981).

(9.) Mitchell, Daniel J., "Income Tax Unfair? Let me count the ways," Consumers' Research Magazine, 24-26, (May 1997).

(10.) "Most Serious Problem? Complexity!" Journal of Accountancy, 60, (February 1999).

(11.) Rosacker, Robert E., and Thomas L. Davies, "An Analysis of Federal Income Tax Complexity Utilizing Internal Revenue Service Estimates for Taxpayer Paperwork Burden," Oil & Gas Tax Quarterly, 791-811, (June 1997).

(12.) Schroeder, Jack D., "Potential Simplification of the Federal Income Tax Law by Eliminating Special Treatment of Capital Gains and Losses," Ph.D. dissertation, Michigan State University, (1975).

(13.) "Taxpayers Want Tax Reform But Do Not Favor Flat Tax," Journal of Accountancy, 31, (July 1996).

(14.) U.S. House of Representatives, Oversight Subcommittee of the Committee on Ways and Means, Hearing on the Impact of Complexity in the Tax Code on Individual Taxpayers and Small Business, (June 23, 1998).
 Complexity of Today's Tax Laws
 Practitioner Educator
 Percentage Percentage
 Response Response
Simple (not complex) 0.00 0.00
Somewhat complex 6.80 9.70
Moderately complex 30.10 26.70
Very complex 43.20 46.60
Extremely complex 19.90 17.00
 Change in Complexity since 1986 Tax Act
 Practitioner Educator
 Percentage Percentage

 Response Response
Much more complex 50.73 40.80
Somewhat more complex 38.54 44.83
Simpler 3.41 5.75
No change 7.32 8.62
 Expectations for the Future
 Practitioner Educator
 Percentage Percentage
 Response Response
Much more complex 23.53 18.30
Somewhat more complex 46.57 55.40
Simpler 9.80 6.90
No change 20.10 19.40
 Taxpayer Perspective of Tax Complexity
 Practitioner Educator
 Percentage Percentage
 Response Response
Very important issue 36.58 28.00
Somewhat of an issue 56.59 63.40
Not an issue 6.83 8.60
 Congressional Perspective of Tax Complexity
 Practitioner Educator
 Percentage Percentage
 Response Response
A very important issue 14.15 9.70
Somewhat of an issue 52.68 70.30
Not an issue 33.17 20.00
 Preferred Method of Defining Tax
 Complexity Percentage Response
 Practitioner Educator
Number of laws/regulations, etc.
involved 40.39 19.80
Taxpayer need to consult tax
professional 18.72 22.10
Likelihood of significant preparer
confusion 11.82 27.90
Need to refer to IRS instructions/
publications 9.85 2.90
Likelihood of preparer mistakes
(unintentional) 6.90 7.00
Number of forms/schedules needed
to complete 4.93 2.90
Time needed to complete form/
schedule 3.94 4.10
Time needed to cover topics in
tax class 0.99 8.10
Likelihood of preparer non-
compliance 0.99 0.00
Other measures (as suggested
by respondents) 1.47 5.20
 Practitioner Percentage Response by
 Level of Complexity and Weighted
 Average Ranking
 1 2 3 4 5 Ave.
Alternative minimum tax 0.00 1.46 10.2 29.6 58.7 4.45
Passive activity losses 0.00 2.93 15.1 31.2 50.2 4.29
At-risk rules 1.46 5.85 17.1 31.2 44.4 4.10
Supplemental inc. & loss 3.40 5.83 30.1 32.0 28.6 3.76
Other gains & losses 2.97 11.4 34.7 36.1 14.9 3.48
IRA etc. distributions 5.88 12.3 33.3 27.0 21.6 3.46
Kiddie tax provisions 0.98 20.5 36.6 20.0 22.0 3.41
Vacation home rules 2.93 14.6 40.5 23.4 18.5 3.40
Capital gains & losses 5.34 16.0 37.4 28.2 13.1 3.26
Self-employed provisions 3.90 17.6 42.9 21.5 14.2 3.23
Depreciation 6.83 21.5 31.2 25.9 14.6 3.19
Hobby losses 3.92 27.5 37.3 20.0 11.3 3.06
Itemized ded. phase-out 6.80 24.3 36.4 22.3 10.2 3.03
Casualty losses 4.41 29.4 35.0 22.1 9.71 3.03
Employee bus. expense 6.83 22.9 42.4 20.0 7.80 2.98
Earned income credit 7.84 28.9 34.3 20.6 8.33 2.93
Education credits 4.88 32.2 40.0 16.6 6.34 2.88
IRA contributions 7.84 32.8 33.3 17.7 8.33 2.85
Invest. interest expense 7.77 30.6 41.3 14.6 5.83 2.80
Moving expenses 10.2 41.8 34.5 11.7 1.94 2.53
Misc. itemized deduction 19.1 30.9 34.8 11.3 3.92 2.49
Social security 17.6 39.0 26.8 12.7 3.90 2.46
Child/depend. care cred 14.1 47.6 28.2 7.77 2.43 2.37
Estimated tax payments 22.3 37.4 25.2 11.7 3.40 2.36
Elderly/disabled credit 19.1 42.2 27.0 8.82 2.94 2.35
Charitable contributions 20.4 38.4 31.1 9.71 0.49 2.32
Taxable refunds & credits 25.2 35.0 26.2 10.2 3.40 2.32
Medical expenses 19.4 49.0 25.2 4.85 1.46 2.20
Alimony & child support 27.9 35.3 29.4 6.37 0.98 2.18
Child tax credit 27.7 42.2 21.4 7.28 1.46 2.13
Tax rates/schedules 42.7 30.6 18.9 6.80 0.97 1.92
Exemptions 34.5 42.7 20.0 2.91 0.00 1.92
Portfolio income 40.8 37.9 14.1 6.31 0.97 1.90
Home mortgage interest 40.3 36.9 18.5 3.40 0.97 1.88
State & local taxes 43.2 40.3 15.5 0.49 0.49 1.75
Filing status 46.1 36.4 14.6 2.91 0.00 1.74
Real estate taxes 53.9 35.9 8.25 1.94 0.00 1.58
Wages, salaries, & tips 70.2 22.4 6.34 0.48 0.48 1.38
Standard deduction 72.3 21.9 5.34 0.49 0.00 1.34
 Rank
Alternative minimum tax 1
Passive activity losses 2
At-risk rules 3
Supplemental inc. & loss 4
Other gains & losses 5
IRA etc. distributions 6
Kiddie tax provisions 7
Vacation home rules 8
Capital gains & losses 9
Self-employed provisions 10
Depreciation 11
Hobby losses 12
Itemized ded. phase-out 13.5
Casualty losses 13.5
Employee bus. expense 15
Earned income credit 16
Education credits 17
IRA contribution 18
Invest. interest expense 19
Moving expenses 20
Misc. itemized deduction 21
Social security 22
Child/depend. care cred 23
Estimated tax payments 24
Elderly/disabled credit 25
Charitable contributions 26.5
Taxable refunds & credits 26.5
Medical expenses 28
Alimony & child support 29
Child tax credit 30
Tax rates/schedules 31.5
Exemptions 31.5
Portfolio income 33
Home mortgage interest 34
State & local taxes 35
Filing status 36
Real estate taxes 37
Wages, salaries, & tips 38
Standard deduction 39
 Educator Percentage Response by Level of
 Complexity and Weighted Average Ranking
 1 2 3 4 5 Ave.
Alternative minimum tax 0.00 0.60 5.70 22.3 71.4 4.65
Passive activity losses 0.00 1.10 6.30 32.8 59.8 4.51
At-risk rules 0.60 1.20 13.9 34.7 49.7 4.32
Supplemental inc. & loss 0.60 7.50 23.0 37.9 31.0 3.91
IRA etc. distributions 1.70 6.40 22.7 37.8 31.4 3.91
Capital gains & losses 0.00 11.5 24.1 41.4 23.0 3.76
Vacation home rules 0.00 8.60 30.5 42.5 18.4 3.71
Other gains & losses 0.00 10.4 32.4 35.3 22.0 3.69
Self-employed provisions 0.60 11.0 32.4 32.4 23.7 3.68
Itemized ded. phase-out 6.80 24.3 36.4 22.3 10.2 3.45
Depreciation 1.70 18.4 28.7 36.2 14.9 3.44
Hobby losses 1.20 14.5 39.3 30.6 14.5 3.43
Kiddie tax provisions 1.10 17.2 43.7 26.4 11.5 3.30
Employee bus. expenses 1.10 20.1 39.1 28.2 11.5 3.29
Earned income credit 1.10 25.1 34.3 22.9 16.6 3.29
Social security 3.40 22.4 31.6 27.6 14.9 3.28
Invest. interest expense 2.30 16.2 43.4 30.6 7.50 3.25
Education credits 2.90 23.4 37.1 26.9 9.70 3.17
Casualty losses 4.41 29.4 35.0 22.1 9.71 3.14
IRA contributions 5.70 21.8 36.8 25.9 9.80 3.12
Taxable refunds & credits 4.60 28.7 37.9 20.1 8.60 2.99
Misc. itemized deduction 4.60 15.5 29.3 31.0 19.5 2.93
Charitable contributions 8.00 29.7 38.3 15.4 8.60 2.87
Elderly/disabled credit 6.50 29.4 41.8 15.9 6.50 2.86
Child/depend. care cred. 6.30 36.0 37.7 16.0 4.00 2.75
Estimated tax payments 12.6 35.1 31.6 18.4 2.30 2.63
Moving expenses 14.9 44.6 31.4 7.40 1.70 2.37
Alimony & child support 18.9 42.3 25.7 10.3 2.90 2.36
Child tax credit 19.0 40.2 29.9 8.60 2.30 2.35
Exemptions 16.0 44.6 29.7 8.00 1.70 2.35
Medical expenses 17.8 46.6 27.0 6.90 1.70 2.28
Portfolio income 24.7 38.5 25.3 20.1 8.60 2.26
Home mortgage interest 29.7 42.9 19.4 8.00 0.00 2.06
Filing status 28.6 45.0 17.7 6.90 0.60 2.05
Tax rates/schedules 43.4 36.6 15.4 4.60 0.00 1.81
State & local taxes 41.1 48.6 8.60 1.70 0.00 1.71
Real estate taxes 46.9 40.0 11.4 1.70 0.00 1.68
Wages, salaries, & tips 53.7 32.6 12.0 1.70 0.00 1.62
Standard deduction 61.3 27.2 9.20 1.70 0.60 1.53
 Rank
Alternative minimum tax 1
Passive activity losses 2
At-risk rules 3
Supplemental inc. & loss 4.5
IRA etc. distributions 4.5
Capital gains & losses 6
Vacation home rules 7
Other gains & losses 8
Self-employed provisions 9
Itemized ded. phase-out 10
Depreciation 11
Hobby losses 12
Kiddie tax provisions 13
Employee bus. expenses 14.5
Earned income credit 14.5
Social security 16
Invest. interest expense 17
Education credits 18
Casualty losses 19
IRA contributions 20
Taxable refunds & credits 21
Misc. itemized deduction 22
Charitable contributions 23
Elderly/disabled credit 24
Child/depend. care cred. 25
Estimated tax payments 26
Moving expenses 27
Alimony & child support 28
Child tax credit 29
Exemptions 30
Medical expenses 31
Portfolio income 32
Home mortgage interest 33
Filing status 34
Tax rates/schedules 35
State & local taxes 36
Real estate taxes 37
Wages, salaries, & tips 38
Standard deduction 39
 Comparison of Practitioner
 and Educator Rankings
 Practitioner Educator
 Average Rank Average Rank
Alternative minimum tax 4.45 1 4.65 1
Passive activity losses 4.29 2 4.51 2
At-risk rules 4.10 3 4.32 3
Supplemental inc. & loss 3.76 4 3.91 4.5
Other gains & losses 3.48 5 3.69 8
IRA etc. distributions 3.46 6 3.91 4.5
Kiddie tax provisions 3.41 7 3.30 13
Vacation home rules 3.40 8 3.71 7
Capital gains & losses 3.26 9 3.76 6
Self-employed provisions 3.23 10 3.68 9
Depreciation 3.19 11 3.44 11
Hobby losses 3.06 12 3.43 12
Itemized ded. phase-out 3.03 13.5 3.45 10
Casualty losses 3.03 13.5 3.14 19
Employee bus. expense 2.98 15 3.29 14.5
Earned income credit 2.93 16 3.29 14.5
Education credits 2.88 17 3.17 18
IRA contributions 2.85 18 3.12 20
Invest. interest expense 2.80 19 3.25 17
Moving expenses 2.53 20 2.37 27
Misc. itemized deduction 2.49 21 2.93 22
Social security 2.46 22 3.28 16
Child/depend. care cred. 2.37 23 2.75 25
Estimated tax payments 2.36 24 2.63 26
Elderly/disabled credit 2.35 25 2.86 24
Taxable refunds & credits 2.32 26.5 2.99 21
Charitable contributions 2.32 26.5 2.87 23
Medical expenses 2.20 28 2.28 31
Alimony & child support 2.18 29 2.36 28
Child tax credit 2.13 30 2.35 29
Tax rates/schedules 1.92 31.5 1.81 35
Exemptions 1.92 31.5 2.35 30
Portfolio income 1.90 33 2.26 32
Home mortgage interest 1.88 34 2.06 33
State & local taxes 1.75 35 1.71 36
Filing status 1.74 36 2.05 34
Real estate taxes 1.58 37 1.68 37
Wages, salaries, & tips 1.38 38 1.62 38
Standard deduction 1.34 39 1.53 39
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Author:Davies, Thomas; Carpenter, Jon; Iverson, Gene
Publication:South Dakota Business Review
Geographic Code:1USA
Date:Mar 1, 2001
Words:5269
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