Exemptions, deductions, and tax credits can lower a taxpayer's ...

[robinn137]

Exemptions, deductions, and tax credits can lower a taxpayer's taxable income. Discuss their relative merits in terms of helping taxpayers reduce their tax liability.
 
  What will be an ideal response?

Question 2

Increase in price of a good will increase consumers' demand. This is a(n)
 
  A) positive statement.
  B) true statement.
  C) inverse statement.
  D) normative statement.

[juwms]

Answer to Question 1

Assuming a constant dollar amount, the most valuable of the three to a taxpayer would be the tax credit. This is because the tax credit directly reduces a taxpayer's tax liability, while the other two merely reduce the level of taxable income. If a taxpayer itemizes, then deductions and exemptions of a similar amount are of equal value to her. If, however, a taxpayer does not itemize and instead takes the standard deduction, then the exemption would be more valuable than the deduction.

Answer to Question 2

A

[robinn137]

TYSM

[kswal303]

Great answer, keep it coming