Progressive Taxation
Progressive taxation rates are unethical and need to be changed. The media likes to say the rich need to pay their fair share and I will show that if everyone paid the same percentage of their income without all the loopholes the current tax system has the government would be better off. This is an ethical issue that needs to be addressed by our current and future leaders to help eliminate the extraordinary amount of debt our country currently has to reimburse. Utilitarianism is that an action is right if it tends to promote happiness and wrong if it tends to produce the reverse of happiness [1].
It also involves the happiness of the performer of the action but also that of everyone affected by it. This would lead the current system of progressive taxation since those involved in creating the current tax system believe it is fair to all involved. The poor would see the rich pay a higher percentage of their income to fund the government and the items that they provide. Unfortunately this country has been using this type of taxation and now it has a tremendous debt to repay. So our current taxation system must not be working if we are not taking in the amount needed to pay our yearly government expenses.
Relativism is the belief that everyone has their own version of the solution to the problem. It is also a concept that states points have no truth or validity, but only a subjective value [2]. The discussion of progressive taxation is not one that many people want to change. Everyone that thinks a fair taxation of a flat percentage is afraid it will not promote happiness among those that would have an increase in taxes. This theory would allow us to give the chance to try a flat tax to see if indeed it would increase the income this country generates along with removing tax loop holes allowing some people to avoid paying what they should.
My view is more of the relativism type of view. I believe that for our country to avoid a horrible financial crisis we must try to generate more income and everyone must pay their fair share which would be of an equal percentage of their income. Progression has been in use somewhere in the world for thousands of years. It is safe to say the debate on its merits goes back at least that far. At the present most nations employ some form of progressive taxation. The first time there was a federal income tax it was imposed in 1861 as a means of financing the Civil War.
The tax rates were decreased after the war and the income tax was allowed to expire in 1872. The concept of an income tax was controversial so when a new income tax was levied in 1894 it was challenged in the courts. In 1895 it was found to be unconstitutional. It was not until 1913, with the ratification of the 16th Amendment to the Constitution, that the first constitutionally sanctioned income tax was enacted. The first income tax was a progressive tax [3]. Today, we Americans are paying the highest taxes in our nation’s history. The current tax system is complex and includes several inequities.
It penalizes those who are married by making them pay higher taxes than single individuals. Many Americans face a death tax that will claim a large portion of their estate after they die. We need to get rid of our confusing, unfair tax code and replace it with a simple flat tax with one rate with no deductions or special interest loopholes [4]. The overly complicated tax code creates an unnecessary burden on all Americans, with an annual compliance cost estimated to be $365 billion. The extensive nine million plus word document is complex and unfair.
It inhibits saving, investment, and creating jobs along with imposing a heavy burden on American families. At the same time, the tax code reduces economic growth. The code is so complex with all of the deductions, credits, and other preferences added to the tax code by the special interest lobbyists. It is because of these loopholes, taxpayers with similar incomes can end up paying different amounts in taxes. This uneven treatment of taxpayers is fundamentally unethical and is not part of the American value of equality under the law.
The tax code should be replaced with a new code that is simple to understand, has low rates, that is flat and fair. The new flat tax as outlined in Heritage’s ‘Saving the American Dream’ plan, would replace the current tax system with a simple tax system that would allow America to achieve its full economic potential [5]. It has to be honest in order to help promote economic growth. It will do this while removing disparities in the tax code at the same time. The existing tax system is wrong, especially in its complication and its decrease of our economic audacity.
The tax system is complex and it is forced upon all taxpayers. The low income must journey thru the extremely hard to understand Earned Income Credit. Those who can save some money must overcome the loss of confidence and go through the hassle of trying to understand the tax rates and manage the different forms of saving. Businesses investing in new equipment must pay extra to get equity capital and must then overcome the tax hurdles added on their vested interests. This results in a deranged tax system which results in a much smaller economy. The need for tax reform is clear.
The tax reform proposals such as the traditional flat tax would only solve part of the problem by regenerating or changing the federal individual and corporate income taxes. A new flat tax would replace income taxes, as well as the death tax, payroll taxes and all tariffs not set aside for a trust fund. Under a flat tax taxpayers will handle a single tax. The design of a flat tax is because of the need for a more rational tax system. Unavoidable high tax rates combined with unethical rules have altered the economic decisions of businesses and families. This leaves the economy in a complete weaker position by these perversions.
We need a stronger economy and that is the goal of a flat tax. It would obtain this goal by achieving an economically neutral tax base and by lowering the tax rates. The amount of taxation and the degree of redistribution are questions that will need to be answered and be separate from the primary question of taxation. Simulations have suggested a flat tax would meet this test of generating enough revenue and would leave the allotment of the federal tax load fundamentally unchanged. A better economy would create more jobs, increased wages and greater economic safeness.
The economy has enjoyed economic growth in recent decades along with too many recessions and high unemployment. While this has been happening China and India are regularly gaining strength, and America must act to match their rise. Tax reform would be a good place to start in gaining and advance America’s economic strength for the years ahead. The federal tax code is very complicated and hard for most to understand. Thanks to personal computers and tax software it has created an issue with policymakers in Washington to create tax complexities that tax professionals can have issues understanding.
There are too many credits, exemptions and deductions and many of them are subject to special rules and only are allowed at certain amounts of income. With all of this complexity individual taxpayers suffer minor compared to the outrageous rules and exceptions businesses suffer thru. As bad as the complexity is the drain on the economic system by our federal tax system is worse. High tax rates have discouraged all levels of productive activity. Our corporate income tax rate is almost the highest in the industrialized world and higher than the average of our international competitors. The economy is further decreased y the existents system’s impulse to overtax saving which means people are discouraged from saving enough for their retirement and for the large investments. This steers consumers toward debt and everyone towards an abbreviated economic security. These reactions will lead to a depressed level of national savings which will lower investment opportunities. The federal tax system should not be this hard to understand and damaging to the U. S. economy. It is this way because for many decades Congresses have twisted the system often creating two new issues while trying to solve one issue.
The income tax has turned to be a bad decision from its outset. After many Congresses it continues to get worse without any exceptions. A stronger economy would be a vital role in advancing the federal finances. This would create better levels of tax revenue and create less spending needs for the unemployed. A strong economy offers increased wages and increased job opportunities to the citizens of our tax base. This would create less poverty and with less poverty comes fewer demands for welfare. A flat tax would be a complete reform of the entire federal tax system as with most previous tax reform proposals.
The flat tax can be started as a single tax plan or as part of a more complete rewriting of our government’s federal fiscal policy. A flat tax would offer astounding understanding for individuals and businesses. It would create much greater clarity so that we taxpayers would be more convinced the taxes that are paid are in close to the amount of their neighbors. It will also allow taxpayers to be more informed about the costs of running our government. The flat tax will free the potential for the American economy to grow without being burdened by high tax rates.
American taxpayers spend an average of 26. 5 hours processing and preparing their tax returns [6]. However companies and wealthy people hire teams of professionals to play the system. How is that fair? A flat tax treats everybody the same. You don’t have to worry about missing deductions that the other guy is taking. Other countries in the world have adopted the flat tax, even former Communist countries. Why can’t the United States? Those other countries have understood that a flat tax reduces the incentive to play the system.
Because of its simplicity and low tax rate, a flat tax encourages people to stop cheating and honestly report their income. They can be assured that both the rich and the poor are paying the same rates and taking the same deductions. We save time and money and make our country more competitive in the world. A flat tax would replace our existing tax system with a very simple single rate system that would only tax individual’s incomes only once, offers businesses with an economical investment-friendly tax, and replace all federal income taxes along with payroll taxes.
This will prove that progressive taxation rates need to be eliminated to allow for a fair and balanced tax rate that all Americans can feel is fair. We do not need to be overtaxed, but equally taxed. We need to save our country from bankruptcy and save it so our children’s children will have a place to call home. We need to keep America the greatest country in the world without having the future generations force to pay even higher taxes because our government officials can’t stop spending the money they do not have to spend. 1 – www. utilitarianism. com – Stanford Encyclopedia of Philosophy, plato. stanford. edu 3 – Hoover Institution, Stanford University, www. hoover. org/publications/policy-review/article/72291 4 – Freedom Works, www. freedomworks. org/issues/flat-tax 5 – The Heritage Foundation, www. heritage. org/research/factsheets/2012/01/the-new-flat-tax-encourages-growth-and-job-creation 6 – David Keating, A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens (National Taxpayers Union, April 18, 2011), 13. Available at: http://www. ntu. org/news-and-issues/taxes/tax-reform/ntupp130. html (April 20, 2012)
