U.s. Federal Government Reform

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

One popular method of tax reform that some of the experts in this field think is worth considering is implementing a flat tax also known as a consumption tax. J. D. Foster says that “any tax with a single tax rate could be considered a flat tax.” An article from the website Tax Policy Center defines consumption as being “income less savings” (Gale). The major difference between an income tax and a consumption tax is the way savings are taxed. With an income tax all income is taxed when it is earned and again when interest is earned on any savings. Critics of an income tax say that this is double taxation and

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.

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.

When comparing the benefits and issues between the flat tax and the progressive tax, it is important to understand the way these two systems operate in today’s economy. The flat tax can be defined as a tax that requires every individual to pay the same rate of deduction regardless of their income. On the other hand, a progressive tax can be defined as a tax where the tax rate is increased based on the income a person earn. This system is operated through the use of tax brackets, where the levels of income are divided into different ranges with each range having a tax rate more significant than the range below it. Furthermore, when evaluating the efficiency of both of these tax systems, one may discover that the progressive tax system provides several different factors that contribute to the efficiency of the economy in United States.

People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.

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 flat tax system in the United States by definition refers to taxing household incomes at the same rate regardless of income levels. Advocates of a flat tax system argue that it will simplify U.S. tax codes and eliminate other taxes. Opponents of a flat tax system argue that it only benefits wealthy individuals and would eliminate the IRS causing wide-spread unemployment. Here are some of the pros and cons of a flat tax system.

Flat tax is a system that would impose a single tax rate on all income subject to tax. Income would be taxed once and only once. Individuals and businesses would pay the same rate. The plan eliminates all deductions and credits. The only income not subject to tax would be a generous personal exemption that every American would receive. And no loopholes. Just a simple tax system that treats every American the same.

"A revolutionary change in our tax system is fundamental to re-energizing the American economy and restoring the American dream" (Moore 1). Currently, there are two major plans being considered to try and fix the tax system in the United States. These two plans are the Flat Tax and the National Retail Sales Tax. "Both the Flat Tax and a National Sales Tax would replace today's discriminatory tax structure with a single low rate. Either plan would promote the kind of capital formation that America needs to boost workers' incomes and raise long-term economic growth" (Mitchell 1). This means that the flat tax would take away the savings from the government and pass them on to the citizens and businesses. By doing this, there would be a rise in long-term economic growth.

The current tax system is extremely complicated and punishes those who are successful by taxing people more than the average citizens. If flat tax were to be in the United States it would create fairness within the economy and be less complicated. Flat tax would not punish people for having higher income; instead flat tax would create equality to all tax payers. The taxpayers would not be complaining to the neighbors or their close relatives about their tax rates and how different they are from each other. Despite the fact that federal employees would be out of jobs, the United States should have flat tax implemented because flat tax spans all income brackets of taxpayers and would have low rates with no deductions or exemptions.

The economy of Hong Kong has been one of the fastest growing for the past fifty years, and their government employs a fifteen percent standard rate. In an article written for the Heritage Foundation, Dr. Daniel Mitchell, who is a highly published economist, wrote on the effects that a flat tax system has had on the Russian economy. In 2001, President Putin implemented a flat tax rate for both businesses and individuals. Putin’s tax reform included a thirteen percent tax rate for individuals, while Russian businesses pay twenty-four percent. However, United State’s based businesses operating in Russia pay a thirty-five percent in taxes, which was the rate for all businesses prior to Putin’s tax reform in 2001. Within two years of adopting a flat tax system the Russian economy grew ten percent, which may seem marginal, but was still better than most European nations and the United States. In addition to the economic growth that Russia saw, it also was able to increase its labor force as more were willing to work because of the lower tax rates. These effects correspond directly to what many predict would occur if the United States were to implement a flat

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.

Should the flat tax rate system be implemented? No, the flat tax rate system should not be implemented. In this paper, the pro arguments will be presented, which will affirm the thesis. Then the con arguments will be presented. A rebuttal will then follow, and finally, the author’s conclusion will be offered.

Policy makers have introduced a solution to the staggering proportion of taxes that Americans spend. The flat tax, based on an idea developed by Professors Robert Hall and Alvin Rabushka of Stanford University to create a fair, simple, and pro-growth tax system (Mitchell 1, 11). There are four basic criteria that make up a flat tax. First is a single low rate on taxable income, the baseline for taxable income would be raised to a certain amount dictated by a personal exemption. Second is simplicity, all Americans would fill out the same postcard-sized form to pay their taxes. Third is the reduction or elimination of deductions, credits, and exemptions, depending