Tax Reform
Understanding Federal Income Tax
Taxes have been part of our economy for a long time and are enforced by the government or other agencies, on income and expenses. Taxation in the United States began when it was composed of colonies. During this time taxes were imposed on commodities through legislative such as the Stamp Act, the Sugar Act, Townshend Revenue Act, and Tea Act. Later, in 1913, the states ratified the sixteenth amendment, which gave congress power to tax incomes. Taxes were imposed on individuals according to their wealth. This was a way in which revenues were raised for public expenditure. But recently, taxation has been a way of ensuring that the split between the rich and poor. Since 1913, many changes have been implemented to the tax system. Rates and exemptions have shifted, marginal rates have sky rocketed, and the system has become very complex. Every time Congress implements new changes to the tax system it is called tax reform. Tax reformers have different goals. Some seek to reduce the level of taxation of all people by the government. Some seek to make the tax system more or less progressive. Others seek to simplify the tax system and make it more understandable, or more accountable. In this paper I will define the three tax systems: Flat Tax, National Tax, and the Status Quo. These are taxing systems that reformers have to ponder when thinking about making changes.
A flat tax system would correct the flaws that our current income tax system has and make taxation more equal for all the citizens of our country. The flat tax system will encourage economic growth by avoiding the system that penalizes people for earning more money. It is argued that the progressive tax system creates a penalty against hard workers, risk takers, and entrepreneurs (Fiore, 2002). A flat tax would also spur increased work, saving, and investment, by increasing incentives to engage in productive economic behavior, it would also boost the economy 's long-term
Taxes have been part of our economy for a long time and are enforced by the government or other agencies, on income and expenses. Taxation in the United States began when it was composed of colonies. During this time taxes were imposed on commodities through legislative such as the Stamp Act, the Sugar Act, Townshend Revenue Act, and Tea Act. Later, in 1913, the states ratified the sixteenth amendment, which gave congress power to tax incomes. Taxes were imposed on individuals according to their wealth. This was a way in which revenues were raised for public expenditure. But recently, taxation has been a way of ensuring that the split between the rich and poor. Since 1913, many changes have been implemented to the tax system. Rates and exemptions have shifted, marginal rates have sky rocketed, and the system has become very complex. Every time Congress implements new changes to the tax system it is called tax reform. Tax reformers have different goals. Some seek to reduce the level of taxation of all people by the government. Some seek to make the tax system more or less progressive. Others seek to simplify the tax system and make it more understandable, or more accountable. In this paper I will define the three tax systems: Flat Tax, National Tax, and the Status Quo. These are taxing systems that reformers have to ponder when thinking about making changes.
A flat tax system would correct the flaws that our current income tax system has and make taxation more equal for all the citizens of our country. The flat tax system will encourage economic growth by avoiding the system that penalizes people for earning more money. It is argued that the progressive tax system creates a penalty against hard workers, risk takers, and entrepreneurs (Fiore, 2002). A flat tax would also spur increased work, saving, and investment, by increasing incentives to engage in productive economic behavior, it would also boost the economy 's long-term
Cited: Dobbs, L. (2004, November 22). Reforming Tax Code. Retrieved February 07, 2012, from CNN Articles: http://articles.cnn.com/2004-11-20/us/reforming.tax_1_flat-tax-income-daniel-mitchell?_s=PM:US Fiore, N. (2002, February 01). Guiding Principles of Tax. Retrieved February 07, 2012, from Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2002/Feb/GuidingPrinciplesOfGoodTaxPolicy.htm Gleckman, H. (2011, 10 31). A Tax Reform Proposal. Retrieved February 07, 2012, from Forbes Business: http://www.forbes.com/sites/beltway/2012/01/31/a-tax-reform-proposal-that-might-work-bring-on-the-vat/2/ Lee, B. (2011, August 11). Fox Business. Retrieved February 4, 2012, from Quick Tax History: How did we get here?: http://www.foxbusiness.com/personal-finance/2011/08/11/quick-tax-history-how-did-get-here/