Flat Tax Summary

While most taxpayers agree that tax reform is necessary for our country the problem they encounter is the difficulty they experience when trying to understand all the political terms used when discussing tax reform. This paper is an attempt to help the taxpayers of our country to better understand the political terminology and gain knowledge about some of the proposals that have been explored.

Donald Trump wants to lower taxes which is great, but there are many setbacks to this. If he does lower taxes it will be harder for the government to have

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.

People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.

Ted Cruz’s approach to the situation is cut the government spendings and lower the national debt. The debt ceiling is rapidly approaching; Ted has argued over not to raise the limit, but use this time to start large cuts in government spending. Ted Cruz is very much so against any government spending. Ted would even go on to say that “It’s a sad statement that the easiest way to get bipartisan agreement in Washington is to increase spending, debt, and taxes” (Patten, 2013). Cruz also oppose any measure to cut military pensions by just 1 percent. This would only cut around 23 billion dollars from the national debt, but it is a start, which Ted Cruz opposes. When confronted by this, he would describe himself as “profoundly optimistic” in weather American can get back on track (Patten, 2013).

The current tax code for the United States is almost 74,000 pages long. Or to put that into a different light: About 116 copies of Herman Melville’s Moby Dick. It is small wonder that a few of the announced candidates for President of the United States, have again begun to kick the tires on the topic of a Flat Tax. But is a flat tax actually a solution to our country’s growing tax complexity? What are the potential economic effects of a flat tax (both positive and negative)? Finally, is a flat tax even a viable solution? In short, will it work? As a concept, a flat tax is spectacular. Simplicity at its finest. As a fiscal policy, I believe that same simplicity must be examined and inspected closely.

Johnson plans to adopt tax reforms, and with that he his plan consists of modest reductions in business taxes might create jobs, Gary Johnson believes eliminating income taxes on businesses will transform the U.S. into the 'job magnet' of the world. As president, Johnson would eliminate income tax and corporate tax and abolish the IRS, replacing all of it with one federal consumption tax. Tax would be regressive, meaning lower-income

Marco Rubio’s fiscal proposals follow that of sociotropic voters and classical economists. His political ideals resound among constituents who believe a prosperous nation is one with little to no government intervention. Further, his positions on taxes follow that of “The Father of Supply-Side Economics”, Arthur Laffer (The Laffer Curve, 2011). Laffer’s theory points out that a government would not collect any revenue if tax rates were at 0% and 100% (Laffer, 2011). His reasoning is that taxes have

Rubio opposes the European -Style tax, a tax that allow the government to raise taxes but not tell you what it's used for. He is planning to cut taxes by eliminating the marriage penalty and Alternative Minimum Tax. He is planning to create a 2500 universal tax credit in the first four year of postsecondary education and relate the

The Armey-Shelby flat tax proposal will scraps the entire income tax code and replaces it with a flat-rate income tax that treats all Americans the same. This plan would simplify the tax code, promote economic opportunity, and restore fairness and integrity to the tax system. The flat rate would be phased-in over a three-year period, with a 19 percent rate for the first two years and a 17 percent rate for subsequent years.

"A revolutionary change in our tax system is fundamental to re-energizing the American economy and restoring the American dream" (Moore 1). Currently, there are two major plans being considered to try and fix the tax system in the United States. These two plans are the Flat Tax and the National Retail Sales Tax. "Both the Flat Tax and a National Sales Tax would replace today's discriminatory tax structure with a single low rate. Either plan would promote the kind of capital formation that America needs to boost workers' incomes and raise long-term economic growth" (Mitchell 1). This means that the flat tax would take away the savings from the government and pass them on to the citizens and businesses. By doing this, there would be a rise in long-term economic growth.

This may sound like a tax plan that will relieve the financial burden on lower-income taxpayers, directly benefiting the poor, but in actuality, cutting taxes for all in a regressive manner gives substantially more money to the wealthiest taxpayers and a very small amount to lower income taxpayers. According to his plan, a typical American family of four will be able to keep at least $1, 600 more of

Finally, Marco Rubio’s tax plan may not be the best one, but it is better than our current one because it cleans up the holes in the corporate tax. There is a lot of good stuff in his proposal, entitled the “Economic Growth and Family Fairness Tax Reform Plan.”(Judis). In his plan, it is suppose to clear up loopholes in the collective tax code, cut the federal corporate tax rate, move to a territorial tax system and erase taxes on capital growth and dividends, among other things. On the individual side, the plan would strengthen the code into two brackets: 15% and 35%. It would clear all itemized deductions save the mortgage and charitable deductions. It would take out the alternative minimum tax. In his tax plan there's no experimental evidence that the plan would actually lead to the makings of future taxpayers, Therefore most of the tax credits would go to parents

Policy makers have introduced a solution to the staggering proportion of taxes that Americans spend. The flat tax, based on an idea developed by Professors Robert Hall and Alvin Rabushka of Stanford University to create a fair, simple, and pro-growth tax system (Mitchell 1, 11). There are four basic criteria that make up a flat tax. First is a single low rate on taxable income, the baseline for taxable income would be raised to a certain amount dictated by a personal exemption. Second is simplicity, all Americans would fill out the same postcard-sized form to pay their taxes. Third is the reduction or elimination of deductions, credits, and exemptions, depending

In addition to economic issues, taxation is also a political issue. Political leaders formulate tax policies to bring reforms in the taxation system in order to promote their agendas. The major tax reforms include: increasing or decreasing the tax rate, imposing new taxes on certain products and changing the definition of taxable income. It is evident from the research studies that no one deliberately wants to pay taxes. U.S’ tax policy reflects expression of influence - i.e., those who have power are successful in paying low taxes and their burden is shifted to people who have no power. Therefore retired individuals, small business owners and farmers find ways efforts to reduce their tax burden. Since its existence, tax policy has been enormously used for promoting political and economic agendas.