Alternatives to the Us Tax System

2212 Words Dec 22nd, 2010 9 Pages
Alternatives to the U.S. Tax System

Both the American people and members of the Federal Government have long griped about the current U.S. Personal Income Tax System. Bush’s Advisory Panel for Federal Tax Reform stated that, “the complexity of our tax code breeds a perception of unfairness and creates opportunities for manipulation of the rules to reduce tax”.[1] The Tax Foundation estimates that $338 billion of time, energy, money, and other resources, are spent annually completing tax returns.[2] Three main proposals, the Flat Tax, the VAT Tax, and the FairTax, are being hailed on the Hill today as the solution to our current onerous tax system. While all have benefits and draw backs, the FairTax is the best alternative to
…show more content…
Furthermore, the Congressional Research Service has estimated an additional $50 billion of revenue for every 1% of VAT Tax levied, causing the head of the Senate Budget Committee to state it has “got to be on the table.” [11] Another main advantage of the VAT Tax is that it distributes the tax burden on different members of the production process. The method of subtracting previous taxes paid also creates an automatic deterrence to attempting to avoid the tax, as the next purchaser will realize your error. Opponents of the Tax say the hidden taxation makes it too easy to implement and later raise the rate, which will disadvantage the U.S., as citizens look elsewhere to purchase goods. Others say it unfairly taxes the poor, who will be paying a larger percent of their income on the Tax, as they spend a larger percent of their income on purchasing goods .[12] While successful in Europe, the regressive nature of the VAT Tax will likely not make up for its revenue raising potential in the eyes of Congress. Arguably the most talked about tax reform proposal on the Hill today is the FairTax, a proposal that ends personal income taxes in favor of a

More about Alternatives to the Us Tax System

Open Document