The Vat And Reforming Income Tax

2307 Words Dec 8th, 2014 10 Pages
Alex Pisani
Term Paper
Macroeconomics
Dec. 8, 2014
The VAT and Reforming Income Tax
Introduction
In the United States a consumption tax should one day become the most equitable and optimal way of collecting tax revenue. The current form of income taxation used in the U.S. is an incredibly complicated and costly means for generating government revenue. This tax system is renowned for its intricacy as it “has spawned a tax industry based on complexity created by our own government” (Bedard 2010). This tax code also founded the IRS which has been known to seize properties and invade extreme depths of privacy without court orders. Although, a consumption tax would not completely eliminate the need for the IRS, or a similar agency, it could certainly diminish the sweeping power currently held over individuals by this government institution. An income tax is not only costly in the amount of time and money it takes to file the paperwork correctly but, it also stunts economic growth as “income taxes are levied on work, savings, and investments. In essence, the government grows by taking money from what makes the economy grow” (Bedard 2010). A consumption tax on spending for goods and services that does not unduly burden the poor nor penalize savings and investments would be a sensible upgrade for the tax policy currently in place. Initially, this essay will discuss issues within the current income and corporate tax codes. The essay will then shift to reforms of the…

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