Determining The Tax System Should Be Structured

Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Edwin Cannan, ed. 1904. Library of Economics and Liberty. Retrieved October 26, 2014 from the World Wide Web: http://www.econlib.org/library/Smith/smWN.html

In my opinion as to whether or not the current federal income tax structure is fair for most Americans is that it is not fair. The following information will provide support for my decision. The main federal tax brackets are for single individuals, married individuals filing separately, married individuals filing as a couple and individuals filing as a head of household. In the financial year 2014, the lowest tax bracket paid a rate of 10% on income up to $9,075 while the highest bracket paid an average rate of 36.4% ($406,751 and above). Most individuals pay taxes across several tax brackets, and as a result, they end up with the progressive tax structure. In the current progressive federal income structure, individuals with a lower

The main topic of this research paper is taxation. Seeing that this topic is pretty open, I’ve chosen to write about the proposed idea of Fair Tax. Along with a little bit of insight on Fair Tax and a couple highlights of history, I’ll try and explain some pros and cons as well as give my opinion on the topic.

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

In the article, “The US Tax System: Who Really Pays” by Stephen Moore, he justifies his belief that there is little to no correlation between economic mobility and equality. Moore delivers his reasoning by contradicting relatively popular statements where some are virtually untrue and others are merely common opposing viewpoints. However, in the end Moore concludes his argument with the belief that raising the taxes on the wealthy would not help the poor’s income mobility, which I support one hundred percent.

In the eighteenth century, most people thought they knew how countries get rich. The way they thought was that you have to export as much as possible and import as little as possible so that they can have a rich economy. They also thought that we had a fixed wealth but Adam Smith was the first person to oppose this theory. He proposed that

Virtually all citizens and politicians alike, agree that the current tax code is entirely too complex, yet nearly every year the system gets more complicated, not less. The reason is that simplicity almost always clashes with the other goals within the tax policy. Most people believe income taxes should be enforceable, fair, and beneficial to economic wealth, all while maintaining simplicity. But even those who agree on the necessity of these goals often disagree about the hierarchical importance of each. As a result, the tax policies usually represent a portion of each competing goal, leaving no room for simplicity. For example, most countries tailor tax liabilities to the characteristics of the individual taxpayer. That can make taxes more fair, but also more complex. Income must first be traced from a business to the

The current federal income tax system in the United States (U.S.) is progressive based on the vertical equity principle. However, the tax code is getting increasingly complex and the wealthy are able to avoid paying taxes through loopholes. Hence, more people are yearning for fairness in taxation. With the looming 2016 presidential election, Senator Rand Paul’s proposal of ‘Fair and Flat Tax’ appears to have the most significant change to the current tax policy and I will now analyze if this proposal will improve the efficiency and equity of the U.S. tax code.

In order for a country to finance its government, tax rates are applied trying to distribute those costs as fair as possible. A benefit principle suggests that financing and its rates should be applied accordingly to those receiving a benefit. The ability to pay principle indicates that tax burdens should be applied based on the earning capability of individuals; those that earn more pay more and those earning less pay less.

As Tax Paying Americans, Tax Plans are a very important concept in our lives. Do you feel that there is a better option out there? In this paper we will discuss the differences between the Fair Tax Plan, Flat Tax Plan and the Progressive Tax Plans. We will discuss the Pros and Cons of each plan. What is the best option out there and is there any other version that could be more acceptable? There are many proposals that have been offered in recent years, it is important to do a thorough review of all plans in order to make an

The wealth gap has been a huge factor in society for a long time, as the vast majority of the wealth is held by the richest quintile of the population. Fair taxes on these affluent individuals and powerful corporations result in better economic equality for the lower class, seeing as tax revenues that are, “used to finance a public good perfectly accessible to everybody… [have] an equalizing effect on the distribution of welfare” (Schwodiauer and Wenig 59). Redistributing massive sums of money that were previously occupied by the upper class down to citizens living off much lower salaries actually has the chance to increase prosperity as a whole: by increasing welfare and lowering the unemployment rate, all citizens have the necessary means to succeed. With better redistribution of wealth that stems from higher taxes, the five quintiles of wealth that citizens are separated into would be much closer together, meaning none of these quintiles are left behind. The International Monetary Fund examined international financial statistics drawn from the United Nations University World Income Inequality Database, showing tax rates on different classes since 1981. These statistics showed that, according to the Fraser Institute, taxes on the highest class dropped from 52.7% to 31.3%—more than 21%—in the following two decades; additionally, according to the American Enterprise Institute, corporate taxes dropped from 39.4% to 28.2% in the same time period (Weller and Rao 636). These lower tax rates are correlated with the immense wealth gap that currently exists, and these rates must be elevated once again to address economic

The Federal tax code of the United States mandates that every U.S. citizen receiving income who meets a minimum income threshold complete and file a federal income tax return prepared in accordance with a complex set of regulations (Arsenault, 2013; Internal Revenue Service [IRS], 1974; Publication 17 [Pub.17], 2016). This tax preparation model relies upon the principal-agent theory to ensure taxpayer participation. In this system, the government is the principal who requires the taxpayer to voluntarily submit a compliant return as its agent. Anyone acting on behalf of the taxpayer becomes an agent for both the government and the taxpayer.

The Current Tax System,’ Gjokutaj).” Another economic benefit of a single rate flat tax system would be the distribution of taxes. Although the burden would be switched from higher income brackets to middle and lower income brackets, the distribution would be more equal with this type of tax. “Currently, taxpayers who are able to shift large portions of their incomes into untaxed forms pay less in taxes than those with equal incomes who are unable or unwilling to make as much use of tax preferences. The result is a wide dispersion in tax burdens among those who are equally well off (‘Why Not a True Flat Rate Tax,’ Browning).” This concept along with the other economic effects described, represent what some call a ‘Fair Tax’ due to the more equal spread of tax liability among all tax brackets. In a country that prides it self on freedoms and fairness, doesn’t it only seem right that our country’s taxes are run through the same ideals.

On December 17, 1996, the Department of the Treasury (Treasury) finalized rules that were intended to simplify the tax entity classification rules. These rules have become known as the “check-the-box” regulations. Simply put, these regulations allow an eligible entity to “check a box” that indicates the desired tax treatment the entity wishes to have. These new regulations signify what was a much needed departure from the previous classification regulations, which were vague, ambiguous, and created many disputes between taxpayers and the Internal Revenue Service (IRS). This simplification of the entity classification rules would make it easier for such entities to gain their desired tax treatment, which allows those entities to focus

Taxation systems are usually modeled in such a way that they take into consideration the social welfare of the citizens. The government and other policy makers have the responsibility of ensuring that the system takes into account the needs of the citizens. The bottom line is that taxation should foster equal distribution of resources. The rate of taxation is usually arrived at after several considerations have been made. The rates are not fixed as they depend on the various economic changes. The issue of how taxation should be distributed among the different economic classes is yet to be addressed.