The current tax policy in the United States is very confusing and it is very costly for our government to administer it. It is in the best interest of our country and its citizens to revise or replace our current tax policy.
While most taxpayers agree that tax reform is necessary for our country the problem they encounter is the difficulty they experience when trying to understand all the political terms used when discussing tax reform. This paper is an attempt to help the taxpayers of our country to better understand the political terminology and gain knowledge about some of the proposals that have been explored.
Like most taxpayers, many politicians also agree that tax reform is necessary in the United States, but that is where the agreement stops between the politicians. Michael Kinsley states that “Reform is any change in the tax code that you favor” (1). Depending on each taxpayer’s personal income situation, what one person favors could be vastly different from what another favors, which is why tax reform is so complicated. Thus the problem comes with trying to figure out what is the best approach to take, how to do it, and when to do it.
Alvin C. Warren, Jr. explains that there are three different options that could be used to reform our tax policy; improving an existing tax base, introducing a new tax, and rationalization of the relationships between taxes (2). In the U.S., tax reform generally has meant “refinement and improvement of the income tax” (Warren 2). Improving an existing tax base should not be done in one big step but in incremental stages. “Years of getting nowhere taught conservatives the virtues of incrementalism” (Ponnuru 2). Another option that Warren explained was introducing a new ta...
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...invest in entrepreneurs to help fuel the American dream. Many jobs could be created with this new source of capital.
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Kinsley, Michael. “Tax Reform in Plain English. Honest!” Time 9 Dec. 2002: 58. Academic OneFile. Web. 31 Mar. 2011.
Ponnuru, Ramesh. “The Perils of Tax Reform: Frankly, Tiny and Timid is Better Than Big and Bold.” National Review 13 Dec. 2004: 32. Academic OneFile. Web. 31 Mar. 2011.
Warren, Alvin C., Jr. “Three Versions of Tax Reform.” William and Mary Law Review 39.1 (1997): 157-75. Academic OneFile. Web. 31 Mar. 2011.
Netzer, D. (1973). The incidence of the property tax revisited. National Tax Journal, 26(4), 515-535.
Whether or not to keep or discard the Bush era tax cuts for the wealthy, give tax breaks to the lowest tax bracket, and even throwing out the entire current tax code and replacing it with a simpler version, tax code and tax law has been a very controversial topic for the past few years. As it stands, the current tax code has over seventy two thousand pages, compared to the four hundred pages it had in 1913. There are many different stakeholders in this debate including taxpayers, corporations, businesses, etc. Americans for Tax Reform (ATR) is an organization that was “founded in 1985 by Grover Norquist at the request of President Reagan”(.N.p.). Their goal is to create and advocate for a simple flat tax,“...on the belief that they will provide a strong stimulus to investment, employment, and output” (Stokey 1). They promote their organization and represent taxpayers in all fifty states. Along with tax reform, ATR also advocates for individual health care, free trade, and spending transparency (.N.p.). Using very simple and easy to understand images, ATR is able to convey their goals and get information across to the general audience that visits their website.
Many debates have been waged over the decades on what will be taxed, on who shall be taxed and how taxes are collected. Since the 16th Amendment was ratified in 1913, the debate has intensified, centering on how high to make the income tax rate. Most Americans were not concerned since the Amendment was sold to them as something that would only affect corporations and the rich. With ever increasing fervor these corporations created lobbyists to convince Congress to exempt them from some or all of the income tax. The big breakthrough in this was taxing the worker directly with payroll taxes during World War II. This method of collecting income tax was sold to Americans as temporary, but Congress has extended it indefinitely and the public has become used to it. The next few decades saw the debate revolve around creating tax breaks for individuals in an attempt to modify behavior or spending. This has resulted in over 67,000 pages of tax code and an entire industry devoted to tax compliance and evasion, with the unintended behavioral change of corporations and the rich parking their money outside of the United States in small island nations to avoid taxation. These offshore accounts are estimated to hold $10 trillion dollars, a number approximate to the national debt. The FairTax Act should be enacted because it eliminates all federal income taxes for individuals and corporations, eliminates all federal payroll withholding taxes, abolishes estate and capital gains taxes and repeals the 16th Amendment; thus eliminating the need for offshore accounts.
The tax policy in the United States is very confusing. When the tax policy was originally written in 1913 it was four hundred pages. Now, over the past ninety one years, that tax policy has evolved to over 72,000 pages. Since the tax code has become so lengthy and nearly impossible to understand, the topic of tax reform has been in the minds of many. Although, most barely think about tax reform until tax season. It is a controversial subject due to the impact a change in tax code would have on the American people. The two most popular and widely known stakeholders in this debate are the two major political parties in the United States, the Democrats and the Republicans. The two parties share absolutely no common ground on the subject of tax reform, other than thinking the other parties solution is wrong. The Democrats, in general, want to raise taxes on the wealthy, while Republicans, generally, want to cut taxes for everyone (Democratic Party) (GOP). Unfortunately, with the United States economy currently doing so poorly, the parties can no longer afford to remain at a standstill, some sort of compromise is going to have to be made. The implementation of a flat tax, and discarding the current tax system would be a compromise that both parties can agree on and will simplify the tax code, overall benefiting all Americans.
To reiterate, the current tax system is thought to be regressive because the tax system does not provide a balance for those with high income and those with low; however, this can be fixed by adopting some aspects of a state with progressive features. For instance, the state of California as a much better tax system than Texas because they have a “graduated personal income tax structure and provides personal income tax credits in place of personal and dependent exemptions” (“California”). If Texas adopted these two characteristics into their tax system this will began to progress because some of the faults in the present Texas tax system is the lack of personal income tax structure and it does not not provide tax credits to low-income taxpayers to offset other expenses. Making these few changes will help Texas greatly; however, making this change will be difficult because the state is comfortable with the tax system they have. Texas does not care to alter the tax system much because although it is weak, it does not take too much away from the overall economic success the state
Ehrenreich, Barbara (2001). Nickel and Dimed On (Not) Getting By in America. Published- New York, New York.
I. You might have heard politicians in the news, talk about overhauling our tax system with a new fix-all idea, the flat-tax. This would simplify our overly complicated tax system and might seem appealing at first glance, however there are serious problems with it.
Economics is the study of currency and how it is made and distributed through our economy. Taxation is one of those main issues in this category. The Democrats and Republicans both consider taxation a major issue but both have different ways they are trying to deal with the problem. The Democrats believe that extending tax cuts to the middle class families of America that make less than 250,000$ a year while raising taxes on the extremely wealthy and huge corporations to help parents pay for college (“Democrats Unveil”). While the Republican Party says it would “try to eliminate taxes on interest, dividends and capital gains altogether for lower and middle-income taxpayers also would work to repeal the estate tax and the alternative minimum tax” (“Democrats Unveil”). They both want to change the tax policy to try to help pay off our debt and or help Americans to live an easier life. Another Key issue in this category is Medicare. Both parties believe that the Medicare policy should be changed. "Democrats adamantly oppose any efforts to privatize or voucherize Medicare" when the Republicans pledge...
Rust, M. (1998, August 3). "Public Welfare for Billionaires." Insight on the News. v14 n28.
Tax season is upon us and many Americans are scrambling around trying to get theirs finished by the end of the dead line. This time of year is not a joyous occasion, everyone on edge most of them pondering how much they will have to pay. While others are wondering if they will get as much as they thought they will, or are they going to be one of the unlucky few to be audited? I am one of those people, anxious, and waiting at the edge of my seat for that hammer of reality to come crashing down over my head. With each new election year comes new arguments and battles fought within the halls of Capital Hill, but who is right and is there a middle ground? I will present you with the facts as I have found them; the choice is yours to determine what is right and what is wrong.
Bullock, Alan, and Maurice Shock, eds. The Liberal Tradition: From Fox to Keynes. Clarendon Press, 1967.
The current tax system that the United States uses contains several flaws. First of all, it is very complex. It is comprised of many various variables that can create loopholes. These loopholes can cause two equal income families to be paying very different tax rates. In fact, there are 480 different types of tax forms (Website). The current tax system is also very unfair for the wealthy. Because it is a progressive tax, it is higher for people who have higher incomes. People should not be punished for being successful. If a flat tax policy were instituted, then it would simplify the complicated tax system, create fairness within the economy, and promote a desire to thrive financially.
The use of taxes is one of the government's favorite ways to make its presence known in the economy. While this method seems blatantly obvious, many of the ways the government uses the money collected by taxation is not. Some of the money it takes is used to fund other programs designed to "protect" consumers and to "create" jobs. Be...
Walton, John, Impact of the Second Reform Act, http://www.orange.k12.oh.us/teachers/ohs/tshreve/apwebpage/readings/secondreformbill.html, 31 September 1998, Accessed 23rd February 2011.
The Social Studies Help Center (n.d.). Monetary and Fiscal Policy. Retrieved November 5, 2011, from http://www.socialstudieshelp.com/eco_mon_and_fiscal.htm