The Issue of Tax Reform Essay

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The Issue of Tax Reform The issue of tax reform is not a new one. It has been debated since the founding of the very first modern government. At the heart of the debate is what the role of government should be in its citizen’s lives. In the United States the controversy over taxes has been central since the nation’s founding in 1776. To analyze the issue of tax reform one must first look at taxes and what they represent to the United States. According to the encyclopedia Britannica almost all of the Untied States government’s revenue comes from taxes. The most important of all the levied taxes is the personal income tax, which brings in by far the most revenue for the government. This tax was first developed during the civil war,…show more content…
The reform that would be most beneficial to the Untied States as a whole would be to revamp the personal income tax system that we have now and replace it with a national sales tax. The first proposal for tax reform, the flat-rate income tax, would supposedly make the tax code simpler by eliminating the graduated rate of our current system. It would also eliminate all deductions and exemptions. The graduated income tax code that is our current system, which has rates that increase as income rises, would be leveled to a single rate for all income levels. An article in “Nation’s Business” states that “These high individual tax rates apply to the income of many small businesses, including sole proprietorships, partnerships, corporations, and limited-liability companies. High marginal tax rates create a disincentive for small business owners to earn additional income since they know a greater percent of their incomes will go to the federal government.” In light of this statement, the graduated rates of the modern tax code hurt many businesses by taxing them at higher rates as they earn more profit. The principle of all business endeavors is to earn a profit, and the flat-rate income tax would provide an incentive to American businesses. Economic growth would therefore be spurred if the path to greater income was not hindered by high tax rates. Also as part of the flat-rate income tax plan, the tax rate is the same for both
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