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lana [24]
2 years ago
13

Why don't most tax expenditures help much if your federal tax bill is zero? You don't qualify for tax breaks if your federal tax

bill is zero. Taxes are an automatic stabilizer. Most tax expenditures are specifically for high-income people. Most tax breaks reduce taxable income, but reducing taxable income below zero does not reduce the tax bill.
Business
1 answer:
MakcuM [25]2 years ago
6 0

Answer: Most tax breaks reduce taxable income, but reducing taxable income below zero does not reduce the tax bill.

Explanation:

Tax breaks can be used to reduce your taxable income sometimes all the way to zero. This however simply means that you don't have to pay income tax but does not mean that there won't be other taxes to pay.

Because of these additional taxes left to pay, a person will still pay certain taxes even if their taxable income is below zero. Tax expenditures therefore do not help much with a federal tax bill of zero.

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