Abstract:
As a fourth-year accounting and finance major, I have been exposed to debits, credits,
balance sheets, income statements, profit & loss statements, amortization schedules, cost
accounting systems, and depreciation methods, among many other things. To be certain, these
are all useful tools and each item mentioned tells a story about the finances of individuals,
investors, and companies in some way or another. And while all of these items mentioned have
their own important place in the world of business, none of them quite touch on human
behavior and the role it plays in everyday decision-making the way that taxation does. Tax law
impacts the way people approach financial decision-making in a way that financial accounting,
cost accounting, or audit work can never do. One of my primary interests in regard to tax law is
refundable credits, particularly those that affect low-income individuals and households. The
purpose of this paper is to explore why governments tax their constituents, the different types
of tax systems a country can implement and how these systems affect a government’s
constituents differently, the history and purpose of refundable tax credits, just how much
better off these refundable credits make low-income individuals, how the establishment of the
minimum wage has impacted low-income individuals since its inception, and to explore
whether U.S. lawmakers should consider expanding these credits and/or the minimum wage for
the sake of low-income earners.
