America’s Tax System, Flat or Fair?
“No taxation without representation!” A fair tax system was what the American colonists were looking for and one that many say we are still trying to achieve. Today, while we are all represented in government and are all required to pay taxes, some still perceive the system of taxation as unfair, allowing for specialized interests, loopholes, as well as more/less taxation based on income. Should the American tax system remain the same, where individuals’ income is taxed based on how much one makes with loopholes and deductions? Should we consider a system that would eliminate progressive income taxes, taxing everyone at an equal rate through the Flat Rate Tax or should taxes be collected through national consumption of retail goods and the Fair Tax System?
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has been road-tested.
While there are advantages and disadvantages associated with each of the new tax proposals, I believe that the Flat Rate Tax System would be the most fair. Taxing everyone’s income as a flat rate treats everyone equally, no matter what income bracket you are in. Since the flat rate percentage, usually around 17% is assessed on one’s income, it is still progressive, so the rich would pay more as a dollar amount and the poor would pay less (in dollars), but nevertheless an equal percentage (Hall, 2001). The Fair Tax System, although taxing everyone equally through the purchasing of retail products, places more of a burden on the lower income class, as they are the ones who spend more freely. Even if the Fair Tax would rebate or eliminate taxing of those below the poverty line, the question of equal taxation arises again as these individuals would not be...