A Progressive Tax System

America currently has a progressive tax system. This system is identified by the fact that there are percentage brackets which are determined by one’s income, as the income increases so does the percentage of the income being taken out. The progressive tax can be illustrated by a curved line going upwards on a graph plotting income bracket on the x axis and amount of money being taken out on the y axis. The flat tax is the proposed tax which is signified by having one single percentage throughout all income brackets this would look like a straight line on the graph explained above.

Today, the federal government controls unrestricted means to execute whatsoever the elected official desire, without reverence for the Constitution the aforementioned vanished gradually. Common people are not knowledgeable that the United States in 1776, did not have personal income tax sovereign, and in 1913; a perpetual income tax was inflicted upon the people. In actual fact, the Constitution disallowed a direct income tax on there person. For longer than a century, the leadership endured completely without proceeds from wages. Formerly, the U.S. government performed

Throughout the entire existence of any form of government, there has always been taxes. Most of the time (if not all), people hate taxes. With this being said, the United States has adopted a progressive tax since its very existence. We believe that if our nation is placed under a flat tax system, our economy will operate more effectively. If we incorporate a flat tax system we will be able to ensure fairness among all citizens, eliminate tax loopholes, and allow opportunities for business expansion. With this being said, we will be examining the strengths and weaknesses about the flat tax system and how it has been used into practice.

The federal and state governments provide the American citizens with all of the basic necessities within our communities and society that is taken for granted. Programs responsible for assistance in times of need, providing a quality standard of living, and maintaining the strongest military in the world costs incomprehensible amounts of money and could never exist without taxes from the American people. Taxes are payments made by individuals and businesses to support the government and its services. The constitution grants that congress “shall have the power to lay and collect taxes, duties, imposts, and excises and to pay the debts and provide for the common defense and general welfare of the people”. Taxes paid by Americans redistribute

The main reason why they created this feature was to prevent citizens from being unfairly taxed like the colonist were by the British. However, this left the federal government weak economically. According to Placard C, “This created financial problems because states often did not pay what was requested of them by the federal government.” Without the power to tax citizens, the Congress did not receive enough money to hold up a strong government or efficiently manage the nation. This reveals how the government could not afford important needs in order to protect and support the nation, such as weapons or a military.

Taxation, a method by which a state, local, or federal government collects money from its citizens in order to fund the operations of the governmental body. When our nation first began, it was built upon the unanimous hope of freedom from Europe shared amongst a group of brave men and women willing to risk their lives to make the journey across the ocean in order to found a nation free from the King. In the late 1700’s, the 13 colonies of America were established; free from the rule of a monarchy, the Americas were an independent nation run under the Articles of Confederation. The Articles of Confederation formed a weak form of government under which the balance of powers between the state and national government were unbalanced. Congress had no power over the states; they could not collect taxes which were vital for the survival of the emerging nation. It was not until approximately ten years later that the United States Constitution was ratified and a democratic government was formed under which a balance of power between state and federal governments was enforced. Under the new system, congress could impose taxes upon citizens for the purpose of paying the country’s debt, security and welfare.

The focus of what the government wanted to tax changed over the years, it started with taxing incomes and then moved on to taxing tobacco and distilled spirits and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895. In the latter year, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution. It wouldn’t be until 1913 that the 16th amendment was passed and added to the Constitution that income tax would become a permanent fixture in the U.S. tax system.

Then there is the Internal Revenue act of 1861, which increased income tax rate. This assured us that the government would have a, “reliable source of income to pay the interest of war bonds” (119). In addition to that, we have the Subsequent Revenue act of 1862 and 1864, which allowed for progressive tax bracket. This act had a tax system that put a tax on everything, for example, medicines, yachts, and etc. The Morril tariff Act of 1860 and 1861 was a reform in which the tax was doubled on items in which customs tax could be collected. Furthermore, the National banking Acts of 1863 and 1864 encouraged people to carry out national currency and national charters. Provision of the 1864, which executed a 10 percent tax on the banknotes of the states. Because the tax base grew by a significant amount a Bureau of Internal Revenue had to be created to control and regulate the tax needs.

“I love paying my income tax! This tax system is so easy to understand!” said no United States citizen, ever. No one has ever said this because it is highly unlikely that no one actually enjoys struggling with the complexity of the current income tax system in the United States. The concept of contributing to the good of the community, county, state, and nation through taxation is not new, nor is it generally opposed by American citizens. Most tax paying citizens do not take issue with paying for police and fire protection, roads, and national security with tax dollars. However, what they do take issue with is the fact that the current tax code is a complicated nightmare. It is a bureaucratic mess of rules, regulations, and perhaps even infringements upon personal rights. Because of the complexity of the current tax code, the United States should implement a flat tax system for personal and corporate income tax to ensure consistent and fair taxation and to render the tax code as more user-friendly.

In January of 2005, President George W. Bush appointed a bipartisan committee to propose new income tax policies; they were referred to as the “President’s Advisory Panel on Federal Tax Reform”. The goal of the panel was to advise new options in an attempt to make filing of the United States personal income tax simpler. The made a statement about the difficulty that normal citizens have when filing their tax returns, “For millions of Americans, the annual rite of filing taxes has become a headache of burdensome record-keeping, lengthy instructions, and complicated schedules, worksheets, and forms – often requiring multiple

The article of confederation had not given the power to tax. “To lay and collect taxes, duties imposts and excises, to pay the debt and provide for the common defense and general welfare of the united states”. The purpose of taxies, is

Another one of the important themes and trends in the history of the United States is the trend of taxation throughout history and the problems which have arisen from it. The abuse of taxes in early America has lead to many uprisings and is an important trend to learn from so that we don’t make the same mistakes. In America, there were many taxes passed by the British parliament on the goods that were traded in the Americas. These taxes angered the colonists leading to the famous incident of the Boston Tea Party where tea was dumped into the Boston harbor. Many strongly supported the saying of “no taxation without representation” by James Otis. This occurred again in rebellions which tested the strength of the government in the colonies twice.

The American people are in the presence of the highest tax burden in American history; taxes represent a larger share of the U.S. economy than ever before (Armey 2). After World War II, the average family sent only about three percent of its income to Washington. The same family today gives 24 percent of its income to the federal tax collector (Mitchell 1, 9). Once state and local taxes are added to the federal take, taxes make up the biggest slice of the average family's budget. As Daniel Mitchell of the Heritage Foundation shows in Figure 1, the typical American family now pays more of its budget in taxes than it spends on food, clothing, transportation and shelter combined (Mitchell 1, 10).

Therefore, the specific types of taxation are left up to the congress; ultimately decided by the citizens. In 1913, the 16th amendment to the Constitution was passed; allowing taxation based on income. Income taxation eventually became the principal source of revenue for the federal government. However, there are many types of taxes in use today which include income, sales, property, estate, inheritance, and excise taxes. Regardless of the type of tax, all of them are used to fund the government, provide services, and pay interest on the national debt. Taxes can also encourage or discourage the conduct of citizens or financial institutions. Tax incentives such as subsidies encourage a business to hire workers and a sin tax can discourage the smoking of tobacco.

The central of issue in policy making is the fair distribution of the tax burden; the tax should minimize the social welfare of the individual’s subjects to his or her own budget constraints. A large academic literature has developed models of optimal tax theory to cast light on the problem of optimal tax progressivity. This article has tried to explore the path from basic research results of optimal tax theory to formulating policy recommendations. Further it has cast light on taxation of very high earns, second the taxation of low earners and third, taxation of capital income.