Did you know that 44 percent of the people in America do not pay any income taxes? This is approximately 66 million out of 151 million that now pay no income taxes. From 1950-1990, the percentage of people that owed no money for federal income taxes and paid no federal income taxes was 22 percent. This has now doubled and is putting our economy and country at its breaking point. Our current tax system penalizes those that work and save money. People who pay no taxes still get to enjoy the benefits. "A revolutionary change in our tax system is fundamental to re-energizing the American economy and restoring the American dream." (Moore) The United States income tax should be replaced with a consumption tax such as the flat tax to make the tax system more efficient and simple.
Currently we have a federal income tax in the United States. This system began after the ratification and adoption of the Sixteenth Amendment of the Constitution. This amendment gave Congress the power to collect taxes. Our federal income tax is an inclusive tax. This means that we are taxed a certain percentage of the total money we earn. We are also taxed on monies made from investments and monies we inherit. Under our current federal income tax system, people pay taxes based on their total income. This helps those that don't work or make less. Currently low-income families pay little or no taxes. These people with lower incomes will be the ones most affected by a flat tax system. Also, there are allowable deductions under our current income tax system that will not exist if we change to a flat tax system.
Although the federal income tax has loopholes and currently helps low-income families, it needs to be replaced. Congress is currently considering two major plans to try and fix the tax system. 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).
The national sales tax would replace our current income tax system by taxing goods and services. "There would no longer be an inheritance tax or a capital gains tax.
The government would impose a 17.65 percent tax on the value of all final sales to consumers. To protect lower-income citizens, the government would send all households periodic rebate checks, the net effect of which would be to offset the tax burden on purchase up to the poverty level." (Mitchell)
With the flat tax, everyone would be taxed at one rate. "Under the flat tax, the current Internal Revenue Code's 480 forms would be replaced by two simple postcard-size forms. Individual taxpayers would receive a generous allowance based on family size (more than $33,000 for a family of four) but would be responsible for paying a tax of 17 percent on any wage,...