Progressive Taxation Better for Fairness

2000 WordsApr 23, 20198 Pages
Progressive Taxation Better for Fairness Introduction Nowadays, a number of countries have seen impressive economic growth after adopting the flat tax system. This is the particular case for Russia; United States has continued to run massive budget deficits while Russia has already brought its budget back into balance in 2010(Adomanis, 2012). However, More countries enjoy great economic gains from progressive tax system than from flat tax system, which can be seen from the typically example——US. Also in 2010, according to the 2012 Global Wealth Report, the U.S. still ranked as the world’s No. 1 economy, but of 141 countries it had the fourth highest degree of wealth inequality, behind Russia, Ukraine, and Lebanon. Of 16,000…show more content…
Then what does income tax entail? There are several things that determine countries to use different systems to collect tax, one of them is the faire distribution. The fair distribution of the income tax burden has long been a central issue in policy making (Diamond & Saez, 2011, p.1). A large number of academic literature has developed two types of income tax theory to cast light on the problems of fair distribution—— progressive tax system and flat tax system. A flat tax (short for flat tax rate) is a tax system with a constant marginal rate, usually applied to individual or corporate income. Therefore, the same percentage taxes would be paid regardless of the difference of income. It can be seen that flat tax is simple to operate. But it is not true in reality, a flat tax, applied across the board, would also increase the tax burden on those with lower incomes, many of whom currently pay little or no income tax (Sonic, 2013). If a flat tax is only operated without restriction, the simple tax rate cannot keep social order, it needs more complicated rules. For example, for a large company, if it currently deducts income expense to determine taxable amount, the remaining amount after paying taxes would decrease. There’s no lower limit to maintain normal government revenue. Therefore, it requires additional rules, such as an income level beneath which no taxes are paid, a small amount of allowable deductions and at least different for business

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