The United States' Tax System and Flat Tax The United States tax system is in complete disarray. Republicans and Democrats agree that the current tax code is complex, unfair, and costly. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms (Armey 1). The main reason the tax system is so complex is because of the special preferences such as deductions and tax credits. Complexity in the current tax system forces Americans to spend 5.4 billion hours complying with the tax code, which is more time than it takes to manufacture every car, truck and van produced in the United States (Armey 1).
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).
It created a law which made it illegal for employers to pay their workers under .25 cents an hour. While this law made it easier for workers, businesses and industries of the time found themselves lower on their supply of money, and higher on demand of workers. Economists predicted that the Great Depression (already in its ninth year) would get worse, and that Roosevelt would lose popularity among his peers. Little did we know Roosevelt lost 80 seats in the house that year, and the Depression worsened (Folsom). Now, the economics of raising the minimum wage has seen many more positive effects, or according to our president and the National Economic Council.
Tax season is not fun. It brings the un-enjoyable experience of sitting in an overpaid tax preparer’s office; it brings another year that the U.S. cannot collect enough taxes to cover the ever increasing budget; and it brings another year that almost half of this country will not owe anything to contribute to our growing financial needs. Currently, these tax problems have become more evident to the public and are being addressed in this year’s presidential campaign. Some candidates are recommending a flat tax structure. Most citizens have a strong misunderstanding of the concepts behind this structure, which has caused the flat tax to fade away, being a figment of past campaign slogans over the last few decades.
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).
1040) rejects the entire income tax code and replaces it with a flat-rate income tax that treats all Americans equally. The flat rate would not be in full effect until its third year, with a 20 percent rate for the first two years and a 17 percent rate for following years. According to the advocates, this plan would break down the tax code, promote economic opportunity, and reinstate fairness and integrity to the tax system. Individuals and businesses would pay the same... ... middle of paper ... ...ay work if the flaws were worked out and the tax did treat everyone equal, but until then the current tax system seems to be a better choice. Bibliography: Works Cited Armey, Dick.
What happens when tax money is already appropriated to other programs? A tax reform. A tax increase has many times been the government's remedy to a budget deficit; however, this puts a strain on the taxpayers. Of course the financial burden is not equal across the board, as some taxes withhold more money from some individuals than others based on the nature of the tax. A progressive tax takes a larger percent of income from those in high-income groups than those in low-income groups.
This assignment will discuss the government’s need to raise and lower taxes and the outcome it has on the GDP and net personal income and other key factors that play part in the government’s decision on whether to increase taxes on everyone as a way to balance our economy. When the government lowers taxes people begin to feel less uncomfortable about spending their hard-earned money and begin to make purchases. When the taxes are lowered the dollar will see an increase in purchasing power and essentially buy more products and services than before the tax cut. Lower taxes along with controlled government spending have an immediate positive effect on the economy that stimulates the economy to move forward. People begin to spend more money and are not as worried that they have to save every penny that they make; thus the economy will pick up and essentially create more jobs as new businesses arise.