The United States federal tax code contains over four million words and 73,954 pages. If you were to browse the tax code’s table of contents it would offer a glimpse into the complexity of the federal taxation. Annually there are changes to the tax code which implies that taxes will continue to become more and more complex even though politicians are constantly debating a way to simplify it. Taxes that are levied by jurisdictions, such as cities and states, just add even more complexity to taxation in the U.S. Across America there are billions of hours every year working on their taxes, and let’s not get started on the costs of accountants. Currently the United States is operating under a progressive system of taxation. Under a …show more content…
A progressive tax addresses economic inequalities in a society. When evaluating the impact of a tax system on inequality, both the distribution of taxes compensated and the distribution of tax revenue benefits should be considered. If the benefits of tax financed programs accrue mainly to lower income families, while higher income families pay the majority of taxes, then the tax system actually functions as growing the progressivity of the tax system or changing the distribution of benefits. A radical tax system is also a mechanism to address monetary inequalities in a society.
There is also an economic argument for a progressive taxation that it can provide a certain level of public revenue with the lowest possible impact. To understand how, look at how households with distinct income levels would react to a $100 tax cut. A low- income household usually is quickly to invest the total amount of goods and services required, thus injecting $100 more into the economy. In comparison, a high-income household could spend a fraction on goods and services only, choosing to save or invest a portion of the money. The money that a high-income family puts back or invest does not add anything to the general level of efficiency in the demand of an economy. So, speaking like an economist, we would say that the marginal propensity tends to decrease as the individual’s income increases.
Of course, it can be
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Flat tax and progressive tax either can be considered fair or well put together for the American people since it has a rational approach towards taxation. However they do vary from each other when it comes to its treatment of the wealthy people, and each of this system is biased and discriminatory, but at least one good aspect of progressive tax is that people of lower income are still paying low and under flat tax they will end up paying same as a wealthy individual who is well. Only because the name of a policy sounds progressive does not mean its action has to be. Furthermore, the current progressive tax policy is only a few steps away from becoming the flat tax and there is no difference among these two. So if the flat tax is being implemented in the United States it will have validity to do more harm to the majority of the Americans then giving them any
The current tax policy in the United States is very confusing and it is very costly for our government to administer it. It is in the best interest of our country and its citizens to revise or replace our current tax policy.
Last but not least, a decrease in government spending could mean worse income distribution compared with increasing progressive tax. This is because transfer payment forms almost a third of the governments budgets and so by cutting expenditure it is very likely that it will also be cut making the poor poorer and widening the gap. On the other hand, taxes could be increased progressively by for example increasing marginal income taxes so that the people with high income pay more than the poor narrowing the gap between.
One brother has 4 cookies. Another brother has 2 cookies. The brother with 4 cookies did 2x the work to get these cookies. Big brother come along and takes 3 of the first brother’s cookies but only 1 of the second because it’s only fair they have the same amount. How does the first brother feel? This analogy shows the current progressive system of tax and one reason it is flawed and unfair. If America had a flat tax it would leave the first brother with 3 cookies and the second with 1 and 1/2. Sound more fair? This is why America should have a modified flat tax system because it is more fair to the people, it will promote economic growth, and it will make paying taxes easier.
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
One example of the progressive tax system is the federal estate tax. This tax only effects the wealthiest of families, those with assets in excess of ten million dollars, families with less than ten million dollars are exempt from this tax. Income taxes are also progressive; as an individual’s income increases there tax burden also increases. But there are provisions that unequally favor the most well to do. These include provisions for stock dividends and profits from real estate sales to be taxed at much lower rates
I agree with the second article. The article is called “Three Cheers for Income Inequality” and is written by Richard A. Epstein. “Three Cheers for Income Inequality” is about reducing income inequality through tax policies. In order to do so, Richard Epstein discussed giving wealth to the lower class citizens. Richard Epstein says that taking from the wealthy would help and be more beneficial to those who do not have as much. This would make the income line more equal. The money would come through the taxes. (260).
Our current income tax system today is very complex, unfair, inhibits saving, investment and job creation, imposes a heavy burden on families, and weakens the integrity of the democratic process. It can't be fixed and must be replaced. The U.S. income tax code is a long and complex system. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year. The administrative costs of the tax system far exceed those borne directly by the IRS. Each year Americans devote 5.4 billion hours complying with the tax code, which is more time than it takes to build every car, truck, and van produced in the U.S.
In a Progressive Tax system, a larger percentage of income is taken from those who are wealthy or have a large annual income, in taxes. Those who have low incomes do not have as high tax percentage to pay because progressive tax is based on
We have all heard the famous quote by Benjamin Franklin who stated, “In this world nothing can be said to be certain, except death and taxes.” (“Benjamin Franklin Quotes”) We find this to be true as we begin working and feel the pain of money being taken from our paychecks. Then we face the chore of having to file income taxes yearly. Although there are many taxes we are subject to, most people are referring to federal income tax when they complain about taxes. There has been debate for decades about the current system but there has been no agreement on how to fix it. The United States currently has a progressive tax code which means people pay taxes according to their earnings. This has been in place since the time of Abraham Lincoln. An alternative
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
Unfortunately some people do not have the ability to earn a living in a market economy. Others benefit from inherited wealth, hard dedicating work, or owning their business. Governments in market economies inevitably engage in programs that redistribute income, and they often do so with the overt intention of making tax policies. On the other hand, advocates of extensive redistribution disagree and allege that role of government limits the concentration of wealth and maintains a wider diffusion of economic power among households, presently as antitrust laws are designed to maintain competition and a wider diffusion of power and resources among producers. Those who oppose major redistribution programs counter that additional taxes on high-income families decrease the incentives
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.
Revenue that comes from state income tax is said to be progressive, that is because state taxes fall differently on different taxpayers depending on the taxpayer’s income level. Typically, the percentage of income tax paid rises as the taxpayer’s income does, thus the reason they are progressive. The opposite is true for sales tax revenue. These taxes are regressive because regardless the taxpayer’s income, tax rates remain constant. This is sometimes a disadvantage for poorer taxpayers because they have to spend more of their income on what they need (Sims, 2004). The allocation of these funds for elementary and