The tax system has been a debatable topic for as long as taxes have been imposed on individuals, households and businesses. Tax is money earned by the state through the taxation of people. It is distributed and used as funding for schools and other public services. In addition to paying the salaries of government workers, people’s tax dollars also help support programs, such as police men and firefighters. Tax money also helps to ensure the roads you travel on are safe and well-maintained, to fund public libraries and parks, and types of government programs that help the poor and less fortunate. The current tax system that is implemented in the United States is the Progressive tax. There are 3 types of taxes, which are Proportional tax, Progressive …show more content…
It focuses on reducing income inequality. This is one of the biggest pros that progressive tax advocates promote. A progressive tax system acts as a tool for redistributing income from the upper class to the lower and middle class. Those individuals who earn more pay more into the federal government. This helps keeps the income gap from growing wider between the rich and the poor. This can reduce the burden left on low wage workers who can’t afford them. Some people may disagree and say Progressive encourages inequality. More than 40% of the U.S. population do not pay federal income tax through loopholes. Other people pay more than 20% of taxes. Although this tax is a bit more complex to manage it is the most effective in benefiting …show more content…
Some argue that it is morally right that those who can afford to pay more in taxes should do so. Those that have very little income should be helped out by those who can afford to help. A progressive tax allows governments to collect money from those who can afford to pay, and uses it to help create a society that is more happy as a result. Those taxes are used to fund education, medical services, housing assistance, and other welfare programs for those people who really need help. Because so many people need help with these things, society is better off as a whole. This type of tax may be interpreted as discriminatory. (8 Progressive Tax System Pros and Cons) The efforts of the highly skilled, hard working individuals gets cut out of their pay role because they have the height of wealth.
The effects this type of taxation can impose on individuals and society is enormous. The most effective way of taxing civilians is through Progressive tax. There are many benefits in using this taxation system. Some of the most effective ways is by gaining more government revenue in goods and services, enhancing opportunities by reducing income inequality, and fairness in the tax
In this section of the paper flat tax will be compared with our current tax system in order to distinguish if differences it will make in the United States after its implementation. Along with that, the similarities between a flat tax and progressive tax will be noted too. As it is understandable that the ultimately targeted population for the flat tax is the upper class however when it comes to flat tax vs. progressive tax in the United States progressive tax system has been more welcoming than another method. However, as stated by Piketty and Saez (2007), in the United States the federal tax system has undergone three historical extreme changes which have pushed the federal tax system towards a less progressive side. Such in progressive tax system has provided the leverage of lower tax rates which benefits the one percent of Americans but not the majority of the American population. So although it is well circulated that the progressive tax methods have specific tax rates that ensure the higher
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.
America currently has a progressive tax system. This system is identified by the fact that there are percentage brackets which are determined by one’s income, as the income increases so does the percentage of the income being taken out. The progressive tax can be illustrated by a curved line going upwards on a graph plotting income bracket on the x axis and amount of money being taken out on the y axis. The flat tax is the proposed tax which is signified by having one single percentage throughout all income brackets this would look like a straight line on the graph explained above.
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.
The Fair Tax Plan is a sales tax proposal to replace the current U.S. income tax structure. It would allow all taxpayers to pay the same amount of tax, whether they are wealthy or poor. The current tax code has over 60,000 pages, which wealthy people can afford to hire someone to find loop holes that will keep them from having to pay taxes; whereas someone poor wouldn’t be able to afford someone to help them find loop holes, causing them to have to pay taxes no matter what. The fair tax plan code is about 132 pages which allows for greater transparency and understanding for both the wealthy and poor, and it would allow everyone to pay the same tax rate on things they buy. Many view this as a negative aspect because sales tax will be increasingly
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
The view on the current government tax policy is considered “bloated, complex, and antiquated system” that overburdens United States taxpayers. Back in 1996, a proposal was brought by Republicans to Congress which was then passed, but sent to Clinton who later vetoed
The tax system in the United States has changed throughout the years, with many attempts to make it "fair" or "equal" while at the same time generating enough income for the United States government to thrive. It is a complex issue, and a controversial one at that. While it may not be possible for our tax system to ever be fair, it is important to make sure it doesn 't put more financial stress and pressure on one group than on another.
There are three different types of tax systems presented in this article: Progressive income tax, Flat tax, and the Fair Tax. The progressive tax system is what we have in the US and is common in countries across the world. It bases the percentage of income tax you should pay by the amount of income you receive. Basically, if you have a large income then the rate of tax you will pay is larger and, furthermore, if you have a low income you will have a lower rate to pay. Many conservatives dislike this system because it forces the top percentage of taxpayers to pay a majority of the tax revenue. “According to the Tax Foundation, the top 1% of taxpayers have consistently paid more in federal income taxes than the bottom 90% since 2003…” It treats people differently and it allows for
For instance, the fair tax is “regressive” implying that substantial tax burdens are placed on the shoulders of the poor people. This concept is true because the fair tax applies only when someone is spending on consumption (Hodge, 2017). The poor people spend almost everything they earn on their subsistence consumption. On the other hand, sale tax will encourage the rich people to avoid paying tax by minimizing consumption and embracing savings and investment.so they are the most affected group which means the federal government will have challenges in addressing the issue of poverty and
Throughout history, taxation on United States citizens has proven to be a necessary component of a growing economy as means of generating revenue for the federal budget. The federal budget funds the many government programs implemented to keep the disabled, elderly, and unemployed from falling bellow the poverty level. Unfortunately, this fund is not always available when catastrophic evens, such as an economic recession, deplete the revenue coming in and create a budget deficit. In order to regenerate money coming in and replace the deficit, the government calls on money gained from taxes. What happens when tax money is already appropriated to other programs? A tax reform. A tax increase has many times been the
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
If the proportional tax rate does away with corporate tax rate, then it would be beneficial to the U.S economy. Research shows that of “U.S corporations moved 2.5 trillion dollars” out of the U.S due to the corporate tax laws (Donachie, 2016). That is 14 percent of the gross domestic product of the United States. If these companies had stayed, it would have resulted in higher economic activity and job creation. Getting rid of the progressive tax rate would show a sign of confidence to the companies that they can set up shops in the U.S and reap the benefits.
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