As the supreme ruler of my own country, I need to raise $60,000 in taxes from three households. It is necessary to design a fair and effective tax system to raise money based on their family and income conditions. Next, I will explain the criteria and key design elements of the tax system in my country. Last, I will compare the designed tax system with the U.S. tax system.
The tax system in our country is based on Adam Smith’s Canons of Taxation. 1. Equity. Rich people should pay a higher tax than people with lower income; single should pay a higher tax than household. 2. Certainty. Our government will notify households how much tax they are going to pay in advance. The government will also ensure the purpose of the tax collection. 3. Convenience. Tax payments will be accessible and convenient to tax payers. All the tax brackets and deduction rules are clear and easy to understand. 4. Economy. The purpose of designing this tax system is to raise money for public good, for example, road repairs and garbage removal, etc.
Key Design Elements
The key elements of the tax system are progressive tax rate, filling status, dependency exemption, donation exemption, personal deduction, job expense deduction, and a preferential tax rate for capital investment.
Our government institutes a progressive tax rate based on filing status, which classify into three categories: single (8.25%), married without children (6.75%), married with children (5.25%). Those three tax brackets increase the simplicity and efficiency of tax payments. Single has highest tax rate because they are assumed to have less burdens to take care of other family members. Although married couples may have higher income than individuals, the living expenses will also be increased. Married couples with children enjoy the lowest interest rate because of the burden to take care of children, especially children under 18.
Dependency and donation exemptions are crucial elements in our tax system. We offer every family a maximum of four dependency exemptions ($4,000 per person). I believe people with decencies will carry more burdens and encounter more difficulties mentally and economically than...