In the United States, accumulation of material goods as well as wealth is very valued and individuals are highly aware of exactly how much money they earn. The system is transparent and democratic. However, there is an extreme difference between how much money someone earns in wages and other gains and how much they actually go home with. The difference between gross and net income originates in the system of taxation based on income earned. Since the income tax has existed, the income tax code has become increasingly more complex and difficult to understand. Businesses and individuals have suffered at the difficulties and costs of complying with the income tax. There are many other ways a government can collect taxes, the income based tax …show more content…
Dick Armey, a former US Representative from Texas proposed a new taxation plan which he believes will eradicate the pain of the people. The plan is the flat tax. The flat tax will replace the current tax code with a single income tax that treats all Americans equally. All income will be taxed only once and at one rate regardless your revenue. According to Armey the Flat tax will help reduce the paperwork nightmare to a mere one page form. This seems fair and easy enough to digest, but when compared to the Fair Tax there are some notable differences. The flat tax is still a kind of income tax, while the Fair Tax is a tax on consumption. There are far more consumers than wage earners in America. Taxing each consumer will result in more revenue for the US than taxing only the wage earner. Another advantage of the Fair Tax is that only the consumption of new goods and services is subject to being taxed and the consumer has a choice of whether to spend the money on new product or not. Under the flat tax the government is taxing only those who legitimately earn a wage, and therefore does not tax those who are here illegally, or who work for cash to avoid paying
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 “Fairness of Taxation or Wealth Tax” is where taxes are calculated by the net worth of the person or the couple (household). This would be hard for tax collectors to determine each and every component of net worth of a person.
However, I believe the Flat Rate would provide the best alternative, as it is the easiest to revert back to the original if necessary while eliminating a lot of the concerns that are raised about our current system such as equality, complexity, and cost efficiency. Works Cited Hall, A. (2001, August). The X-Men: The New York Times. The Flat Income Tax and the Fair Tax Consumption Tax: A Comparison of Federal Taxation Proposals. Retrieved from https://wilmu.blackboard.com/bbcswebdav/pid-4981484-dt-content-rid- 14738969_1/courses/POL.326.DIS.B2T01.FA2013/FlatTaxFairTaxComparison.pdf.
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.
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.
Many ponder the idea of federal taxes and whether the wealthy deserve to pay a higher percentage rate of their overall income. That is, they argue that because our society needs more equality and a lower national budget deficit, taxes on the rich must be raised. This specific topic has been discussed for decades, and due to the severely different perspectives, it is unclear whether the two sides will ever come to an agreement. President Barack Obama and much of the Democratic Party strongly lean towards raising taxes on the rich, while the conservatives and the Republican Party heavily lean towards a more balanced flat tax. However, after extensive research and focus on what would be best for the equality of individuals, the nation and its economy, this paper will firmly prove that the top one percent should not be taxed any more than they are today.
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.
Texas is one of the seven states that have no state income tax. This means the state does not impose an additional state income taxes on someone’s earnings, but there is still a federal income tax. While many claim this is beneficial to all of Texas citizens and promotes population growth others find it disadvantaging. Their is many disadvantages and advantages to not having a state income tax.
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...
The flat tax will make taxes fair for all people. No matter what race a person is, what social class a person is in, or who they’re friends with, they will end up paying the same rate. Every single taxpayer will have to sacrifice just as much of his or her life as the next person down the road. One of the three main reasons for taxes is to maintain fairness. This is most reasonable ways to maintain fairness. The wealthy will still be paying more money than the poor person, but they both have the same tax burden.
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...
As for me, I have been in favor of the "fair tax" initiative since the time I first read about it. The nice thing about the fair tax is that we are, in some ways, already participating in an abridged method, at least those of us who don't live in Texas or Nevada. I'm talking about a sales tax on consumption. Nothing will tick of the Federal government quicker than the realization that they cannot tax your income, savings accounts, inheritance, etc… It forces the lobbyists out of the tax realm, simplifies the notion of how the revenue is gained at the federal level, severely cuts the IRS, and hamstrings the IRS' ability to be weaponized by political parties. The nice thing is that it is a playing field leveler on steroids where everyone has skin in the game and the consumption rate is what is the controlling factor. Therefore, the wealthy will automatically pay more because their rates of consumption are
Dealing with the IRS can be difficult and frustrating. However, you don't need to take on the task without help. Tax Resolution Services are available for those who are engaged in any kind of protracted review or other administrative process with the IRS. If you need tax advice or any other kind of help, then you can seek out consultants dedicated to providing tax resolution services. Such professionals can offer you a range of information concerning the latest policies and improvements from the IRS.
The four types of taxes this paper will discuss are income tax, sales tax, property tax, and user fees. Income tax was not permanently established until the 16th Amendment was passed in 1913. Most federal taxes had been previously derived from excise taxes on tobacco and alcohol and other consumer goods. The US Constitution, when written and still continues to, legitimize taxation in the United States through Article I, Section 8, that Congress has the power to lay and collect taxes, duties et al, pay the debts or provide for the common defense and general welfare of the United States (Cornell Law LII). Investopedia defines income tax as ‘a tax government(s) impose on financial income generated by all entities within their jurisdictions (Investopedia, 2014). Businesses and individuals are required to file an income tax return every year to determine if they owe taxes or qualify for a refund. That is determined by measuring the total income one earns to a designated tax rate, calculating one’s taxable income, which are some or all items of income reduced by other adjustments or expenses in that tax year. There are different subcategories of income tax; there is a federal income tax that is set by the federal government, apart from a few states, there is a state income tax that is imposed on their respective residents, as well as the possibility of there being local income tax ...