The current U.S. tax program distinguishes rates by an individual 's income. This tax program is also known as the progressive tax program. The counterpart to this program is known as the flat tax program where everyone pays the same rate on income, regardless of one 's wage. This needs to change in order for everyone can be on the same income level. The Government should replace the current progressive tax on income with a simple flat tax in order to create economic fairness and to prevent tax evasion.
In particular, replacing the current progressive income tax with a flat income tax, the government would not support low income earners, but instead promote higher income. This would result in an economically fair country, by providing a common
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This occurs when a person or company evades tax obligations by use of foreign banks, or through progressive tax loopholes. According to the IRS, “13.7% of all taxes that should have been paid (Slemrod 2007)” (Doerrenberg and Peichl 294). Thirteen, and a seven tenths of a percent equates to a total of about two hundred ninety billion dollars lost to tax evasion. In order for the U.S. Government to prevent tax evasion, a flat tax should be installed because a flat tax would not allow any loopholes for tax evasion to occur, unlike its counterpart. A flat tax would not have any loopholes resulting from tax deductions. One of these loopholes for a business consists of using of tax havens which result in “a decrease in debt FPI (Foreign Portfolio Investment) ranging from 0% to 32.5%”(Hanlon, Maydew, and Thornock). Due to the fact that a business’s goal is to sell a product for a profit, any business would strive to save every dollar possible. For instance, businesses can send all their money to a foreign country that does not tax as much as the current American income rate in order to save money. This affects the American economy because these America based companies no longer have to pay income tax to the U.S. Government. These corporations contribute to a “loss in revenue of about $100 billion” (Conason). Of the two hundred …show more content…
Government. Supporters of the progressive tax believe that “An automatic increase of tax revenue generated by a larger tax base”(Piana). On the contrary, historical facts have shown that “the average federal tax rate for the top one percent of income earners fell by 1.1 percentage points in 1997 and a further 1.5 percentage points in 1998. Despite the cut, individual income tax revenues rose by 9.8 percent in 1997 and 10.6 percent in 1998” (Russell). Although raising tax rates would increase revenue, lowering the rate would increase revenue substantially more. This is caused from not only the nation’s richest earning more, but also the would impel the average family to earn more, which will in turn causes economic
Sixteenth Amendment- Authorization of an Income Tax – Progressives thought this would slow down the rising wealth of the richest Americans by using a sliding or progressive scale where the wealthier would pay more into the system. In 1907, Roosevelt supported the tax but it took two years until his Successor, Taft endorsed the constitutional amendment for the tax. The Sixteenth Amendment was finally ratified by the states in 1913. The origin of the income tax came William J Bryan in 1894 to help redistribute wealth and then from Roosevelt and his dedication to reform of corporations. I agree with an income tax to pay for all of our government systems and departments, but I believe there was a misfire with “redistributing wealth.” The redistribution is seen in welfare systems whereby individuals receive money to live. This is meant to be a temporary assistance, but sadly, most that are in the system are stuck due to lack of assistance in learning how to escape poverty. There are a lot of government funded programs, but there is no general help system to help lift people up and stay up, so there continues a cycle of
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
...e, Maxime, and Giuseppe C. Ruggeri. "Flat Taxes And Distributional Justice." Review Of Social Economy 56.3 (1998): 277-294. Business Source Premier. Web. 19 Jan. 2014.
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.
The U.S. along with only 6 other countries use the progressive tax, the progressive tax is a very unfair and inconsistent taxing system.This system has a varying rate that taxes the higher income homes with a higher rate,and the lower with a reduced rate.The Flat tax is a taxing system that has one flat tax rate for all ranges of income homes. The flat tax has been proposed multiple times throughout legislation , but not once has it been taken seriously as a cure to fix the current tax problems.The U.S. needs to adopt the Flat Tax because it is a simplistic system that would be fair to use and also promote economic growth.
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). Time is not the only thing that is lost with the current tax system; Americans also lose great deal of money complying with the tax code. Resources that are currently wasted on record keeping, filing forms, learning the tax code, litigation, and tax avoidance. The cost of complying with the current tax code totals about $200 billion annually, or $700 for every man, woman, and child in America (Armey 1). The overwhelming consensus that the current tax system is inadequate has ignited the search for tax reform. There are numerous proposals for tax reform; one particular proposal brought forth by various conservatives is the idea of national flat rate income tax. The idea is to replace the current income tax with a single rate that everyone pays.
Delayed from the original deadline, Senate Republicans have finished the tax reform that is likely to be voted on today. If the bill manages to be passed, debate will begin over the next few weeks as more changes are amended to it, likely resulting in an entirely different bill. Also, to be put in place may be a system that triggers an automatic tax increase if the GOP’s anticipated economic growth isn’t satisfied. This may push more Republicans away from passing the bill.
Whether or not the United States government should adopt a flat tax system in place of its current progressive tax system has been a hotly debated topic for decades. A flat tax is a tax system which refers to a tax on household income that is the same amount for each household- regardless of income level. The United States currently implements a progressive tax system, meaning that high-income earners pay taxes at a higher rate than low-income earners. The two systems differ greatly in their objectives and methods of execution and typically cause a good deal of unrest amongst lawmakers and citizens alike.
Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...
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.
“Advocates say that, with a flat tax, most people could figure their annual taxes on a simple postcard” (McGrath). That is how simple it is to do the flat tax. People don’t need to spend hundreds of dollars or reserve many hours to do their taxes; rather they can in a few minute have it completed. The Governor of Texas also said in 2011, “It simplifies the filing process, allowing taxpayers to complete their returns in minutes and submit them on a postcard. And it will save Americans up to $483 billion in annual compliance costs” (Perry). It would be legend if people could save $483 billion in just annual compliances only that it not even counting the growth effects that a flat tax would have on the
This change should allot for a more universal wage increase paired with an increase in productivity. Ultimately leading to a decrease in the gaps between the upper, middle, and lower class. I also recommend more government intervention in cities with little to no available work. We as society cannot expect people to survive and provide for their families with absolutely any opportunities before them. It is simply unethical to continue to let the poor work harder and earn less, while the rich work less and earn
Lower-income earners pay a much higher percentage in combined state, local, income, property, sales, and excise taxes. When all taxes are considered, middle-income and upper-middle-income earners pay about as much as the richest 1 %. Not to mention the richest top 1% are also receiving nearly $900 billion a year on tax expenditures alone. They receive these as subsidies, special deductions, exemptions, exclusions, credits, and loopholes.( ) Loopholes that allow wealthy individuals and corporations to pay nothing in taxes have to be closed. That's it! The tax system must be made more progressive, like it was in the earlier decades. Right now, it is the middle class that pays the highest tax percentages, not the wealthy. The highest tax rate on the middle class is near 30 %, whereas the highest tax rate on the wealthy is maxed out at 15 %. This needs to be reversed. The amount of money being paid out to these companies alone could make a huge impact alone on the poverty level in the U.S. Running some figures and taking a look at what the U.S. government spends on five of the big programs that people think of as welfare today these are estimated
Humans are imperfect, and we make imperfect decisions. Even any redistribution would, and historically has, imperfectly address any inequality it attempted to end. And these imperfect results would also necessarily compromise freedom. But I don’t think those are good enough reason to wholly abandon the goal of having an appropriate balance. The loss in freedom of a billionaire paying a million dollars in taxes is magnitudes less than the freedom lost when a single parent has to start working a second job to pay for an emergency medical procedure for their child.
Income inequality is a big problem in the United States because the top, wealthiest American saw huge increases in their incomes, which the rest had their incomes go down. Bottom people do not have the same amount of money and the opportunity to move up the social ladder as the rich people do. In order to reduce income inequality, the government needs to tax the rich people more, and give poor people more money and more social services - education, food subsidies, health care.