Reforming The United States Income Tax

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.

A progressive income tax system is what most countries have adopted for taxation purposes. It appears as if this is the most suitable method as rates increase more to those who can afford to pay them. As taxes continue to increase, more and more people start talking about viable options that would benefit bottom line taxpayers. An option that has been proposed by some is the idea of having a flat rate that in theory would eliminate the concept of inequality by taxing everyone and everything at the same rate.

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.

The once necessary foundation of America has largely been politicized and corrupted. It has hurled its own citizens, in which relied on it, into perpetual hysteria, with little means of escape of its domination. Expatiated by a small handful of individuals is the only manner of controlling this trite of a foundation. This would be abolishing the IRS altogether. Everyone knows that the government establishments have been deteriorating for years, and quite frankly become evil. Maltreating its fellow inhibitors; sucking them dry. The IRS is no different. The IRS has been greedy and fluctuated its rules and standards to meet their satisfaction of their hunger, leaving many deserted and scared.

Many people believe that a course of action that would make sense is reform, a platform especially popular amongst Republicans. This is especially endorsed by presidential candidate Rand Paul. It is one of Dr. Paul’s main concerns as president to reform the tax code. Like many, Dr. Paul believes that the tax code is out of control, and is ineffective. The plan proposed by him entails what he calls “The Fair and Flat Tax”. He has proposed a flat tax of 14.5% for all Americans. Payroll, estate, gift, and telephone taxes would all be immediately eliminated. This plan would cut taxes by 2 trillion immediately. His code calls for an equal tax applied to personal income, wages, salaries, dividends, capital gains, rents and interest. 14.5% applied across the board would bring equality to American citizens. Dr. Paul believes that within 10 years this plan will increase the GDP substantially, and it will put 1.4 more million Americans to work. Some argue that this plan would cut revenue too much, and the government wouldn’t have enough money.

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

First I urge you all to fix our broken personal tax code, a tax code that because of complexity allows some to slip by at the expense of the government and the American people. Our current process of personal income taxation is so complex most Americans are clueless as to how much they are paying and where it is going. What the American people want is fairness, what the American people deserve is fairness, and what this body of congress has the moral obligation to provide is fairness. Not only do we need to eliminate loopholes and complexity but we also need to tax at a level of Austerity that is realistic for our spending. Asking senators, congressman, and congresswoman to try implementing policy that could potentially mean

With the presidential elections coming up, different tax policies are being debated between the candidates. Whether it is proposed by a Democratic or a Republican presidential candidate, there have been many possible solutions presented on how to reform the current tax code. Focusing specifically on four candidates, two from the Democratic Party, and two from the Republican Party, I will compare and contrast their respective tax proposals. While the Democratic candidates generally agree with President Obama’s current tax code, all four candidates are looking to reform it in some way in order to, in their own eyes, better the current tax code affecting today’s citizens.

The alternative minimum tax (AMT) was created to prevent high income level individuals from using deductions and credits to avoid paying federal income taxes (Tritz, 2015). Due to inflation AMT now spreads to include more individuals beyond the highest-income taxpayers and straying from its original objective. Consequently, AMT has affected the economy by over-complicating the already complex tax code, creating an additional obligation for taxpayers, and burdening more taxpayers than its original intention. This relates to our course content, which includes the calculation of AMT, the differences between AMT and TMT, the differences between AMT and the regular tax rate, and disallowance rules under AMT.

“… understand that when we stand together, we will always win. When men and women stand together for justice, we win…. (Bernie Sanders)” Bernie Sanders is one of the Democratic candidates for the 2016 presidential campaign. He believes in making America a more fair and honest country through law reforms and education. Mr. Sanders is taking a stand for middle class and poor families, trying to make education cheaper and better as well as reforming the tax system to remove the loopholes for the super-rich. Bernie Sanders is the clear and obvious choice for president if America is to become a better place.

The alternative minimum tax (AMT) is an income tax levied by the federal government on corporations and individuals. Congress enacted the AMT as an alternate form of income taxation to ensure that taxpayers with substantial economic income cannot use exclusions, deductions, and credits to avoid a significant part of their tax liability. Because corporations are allowed to reduce their income tax liability, (sometimes to zero) with exclusions, deductions and credits; IRC Section 55 requires many corporations to add back some of these deductions and credits and pay tax on the recalculated amount.

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

Over the past decades, the number of AMT taxpayer have been constantly growing, especially among the middle income class. According to Bruce \& Liu (2014), one reason for the rapid expansion of the AMT is that the AMT tax brackets are not inflation indexed whereas the tax brackets, exemptions and standard deduction under the regular tax system are periodically adjusted for inflation. Besides lack of inflation indexing, tax cuts during the early 2000s reduced tax liabilities under the regular tax system for many households without a corresponding adjustments for the AMT. The combination of lack of inflation indexation and tax cuts have pushed the AMT towards millions of taxpayers and made it an increasingly important factor in the U.S. income

One proposal for the lowering of taxes in the United States is Herman Cain’s 999 Plan. Herman Cain is a republican politician running for president in the year 2012. The 999 Plan is a tax reform plan that would change personal income tax, national sales tax, and corporate sales tax all to nine percent. (Astor) The argument for the plan is that it would strengthen the economy and create jobs because it would lower taxes by 26 percent on businesses, therefore giving them incentive to start hiring, therefore creating new jobs for Americans. Currently the United States Unemployment rate is at 9.1 percent. Also corporations would be more willing to bring their profits home due to the lower

Arguably, the purpose of the tax system is to generate adequate funds to finance the smooth running of an economy, most especially in terms of redistribution of income to bridge the gap between the rich and poor. Designing and adopting a tax system that is efficient and fair is of great importance to the government and policy makers of any nation. According to Mankiw et al (2009) designing a system of taxation which is optimal has been a long standing issue which has been of interest to postulates of economic theory and bewildered policy makers. The purpose of this presentation is to critically examine the work of Mankiw et al (2009) titled “Optimal taxation in Theory and Practice”. Their paper examines the relationship and interaction between taxation theory and taxation policy as it applies to real world situations. They also suggest eight important lessons which they believe the government and policy makers could learn from the existing literature on how an optimal tax system should be structured. Of the eight recommendations they suggested, I shall examine the first three which are “that optimal marginal tax rate schedules depend on the distribution of ability; that the optimal marginal tax schedule could decline at high incomes and that a flat tax, with a universal lump-sum transfer could be close to optimal”.