Taxation Is A Way For The Government

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.

In the United States, the top one percent received about 20 percent of the overall income for 2016. This creates an uneven distribution of income causing Americans to argue about whether or not the wealthy should pay more in federal income taxes. One side of the argument is that the wealthy make a huge portion of the nation’s income; therefore, they should have higher tax rates. The other side argues that wealthy Americans already pay their fair share of taxes by paying nearly 40 percent and should not be forced to pay more. These arguments both use compelling evidence to make their claims; however, a solution could be reached by increasing the tax rate of the top one percent by only 10 to 20 percent.

One of the major problems that this act of legislation causes economically is an unequal taxation of different groups based on their income. Those who make $400,000+ are taxed a rate of 39.6% of their total income. (H.R 8, 112th Congress) This does not incorporate sales tax and property taxes that are also taken each year as well. In the book “Economics in One Lesson” by Henry Hazlitt, one topic that is discussed is how taxes discourages production. In the case of The American Taxpayer Relief Act of 2012, those who are of working class category will not see a change in their tax rates. This is great since the monetary funds that they do not pay in taxes they can either invest or use in the market. However, the taxes for those who are of upper class status have the burden. As Hazlitt

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

Generally, the income earners pay less income tax and more payroll taxes while the high-end income earners pay more income tax and less payroll taxes. The low income earners however get credit benefits as the government pays for their payroll taxes. Therefore, the high income racket still suffers the burden of individual taxes. In 2014, the bottom 20% had an effective tax rate of -4.5% while the top 1% faced an average of 24.6% a margin of 29% creates a very huge economical gap between the rich and the poor. This only ends up hurting the economy more. As a result, I believe the highest effective tax that should be applied to the top 1% should not be more than 20%. If it goes beyond 20%, they shall start demanding for tax cuts and further design ways to evade the tax payments.

“I love paying my income tax! This tax system is so easy to understand!” said no United States citizen, ever. No one has ever said this because it is highly unlikely that no one actually enjoys struggling with the complexity of the current income tax system in the United States. The concept of contributing to the good of the community, county, state, and nation through taxation is not new, nor is it generally opposed by American citizens. Most tax paying citizens do not take issue with paying for police and fire protection, roads, and national security with tax dollars. However, what they do take issue with is the fact that the current tax code is a complicated nightmare. It is a bureaucratic mess of rules, regulations, and perhaps even infringements upon personal rights. Because of the complexity of the current tax code, the United States should implement a flat tax system for personal and corporate income tax to ensure consistent and fair taxation and to render the tax code as more user-friendly.

Another huge problem is the way that the tax code works. As Warren Buffett explains, the “tax code is tilted towards the rich and away from the middle class.” It’s actually upside-down those with more pay fewer taxes, than people with less. Though the top rate for wage-based income is 39.6%, the rate for income from investments (capital gains) is only 20%. That means wealthy people pay a lower tax rate than the rest of us. Examples include Buffett, whose tax rate is about 17%, while

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.

Did you know that an astonishing 43.4 percent of the people in America do not pay any income taxes" (McCullagh 1)? This is roughly 65.6 million people that aren't paying taxes and this is putting our economy and country at its breaking point. Our current tax system penalizes those that work and save money. People that pay no taxes still get to enjoy the benefits. The United States needs to look at which tax is fairer to the people and easier to administer by the government. Although some may disagree, the Flat Tax should replace the income tax to simplify and bring fairness to the system, increase income, and create jobs.

The supporters of the Flat Tax system are quick to point out this system's attributes but not as quickly as the criticisms by those who oppose it. The filing of taxes each year would be much easier because there would be one set rate to pay. This type of system also discourages, and makes it almost impossible, to find and use any existing schemes that are present to avoid paying taxes. However, because there is a set rate at which everyone needs to pay, this system is quite unfair. Those who earn and have a lot of money should not pay the same amount as someone who has only a fraction of their wealth. The wealthier you are, the more you should pay because you can afford it. If there is a set tax rate it would be too high to some people and pocket change to others. A system like this also takes away many, if not all tax deductions. An event like this would cause irreparable injury to the middle class, who often times rely heavily on money they will get back from tax deductions.

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

Taxes could be set at a specific percentage or a specific dollar amount. This idea seems fair, with everyone paying the same rate, but, in fact, it can be extremely detrimental to low income families. Flat taxes are usually set in the neighborhood of 17 to 20%, meaning that lower income families, let’s say, families making $5,000 a year would pay 1,000 dollars leaving just 4,000 to pay for necessities. On the other hand, wealthy families making 400,000 a year would pay 80,000 dollars, leaving 320,000 dollars for spending, significantly more than low income families. Additionally, this system has not gone unproposed. It has been brought up four times in the last 30 years, the most recent of which in 2011 when several republican candidates embraced the flat tax, including Herman Cain with a 9% set tax, and Rick Perry with a 20%. However, these proposals and others similar to them have yet to gain traction in our government. No form of the flat tax has ever made it past the first stages of formation, which means it is very likely that there will never be a successful plan.

Tax system is a legal system of imposing and collecting taxes from the citizens of the country. As it has been stated by Albert Einstein, the hardest task in the world is to understand the tax system of a country. The United States’ tax system is so complicated that its tax code contains almost 3 million words and 6,000 pages. Moreover, the taxes implied by city and state governments add more complexity to the federal taxation system. In this case, we do not need to understand the complexity of tax code system in order to get acquainted with the significant role of taxes in American society.

Sales tax is one of the most conversed topics and in the national spotlight frequently. States have been struggling to gain a hold on internet sales and the related tax liabilities. Sales tax policy is an intriguing subject and the current internet revolution is pushing discussion of sales taxes to the forefront. This has caused a high level of distress held by business leaders, bureaucrats, and politicians in the field of sales tax. The current goal and focus on sales tax policy is that a more rational sales tax compliance environment can be developed.