Reference no: EM131307350

When thinking of proposing a flat tax you have to examine macroeconomics as well as microeconomics. I personally do not think that we should have a flat tax rate. The reason being, there are different tax brackets, you have the rich, middle class, and the poor so it seems the flat tax would benefit the rich, but the middle class and the poor who haven't made much for the year would end up with much of nothing, verses the way the current system taxes are set up now.

Most individuals can benefit from the education credits and mortgage deductions. As far as the economy goes if the proposed flat tax would go into effect it would crash. The income tax season is when many spend the extra money with businesses overall.There would be no extra money to spend to keep the economy where it needs to be , which would cause businesses to cut costs and be able to retain profitability. And with the cost of living on the rise, while most pay is at a stand still, it becomes very difficult for the average family to make it.

The merits of a national sales tax would be from my understanding that there would be no taxes taking directly out of your pay, but that individuals would pay taxes at a higher rate for everything purchased separately with some things being higher in taxes than others, even possibly paying taxes on gas. At the end of the year there would be no income tax checks issued out or no one would owe taxes to the IRS, to me the only ones that would benefit from a national sales tax are again, the rich. I think this would downsize the IRS as well as put middle class and poor people in a hardship. Businesses would be hit hard as well with revenue because a lot of people would not be able to afford to shop as much, only retaining to paying bills and buying things that are necessary.

References:

Jones, Rita C. (2012) Income tax reform and the flat tax. Volume 6, Issue 2.

Mutascu, Mihai (2011) Taxation and democracy. Volume 14, Issue 4.

Deffaa, Walter (2011) New impetus for EU taxation policy. Volume 46, Issue 5.

Part2

Personally, the flat tax rate sounds good in theory. It would all come down to what the actual tax percentage is at each income class. If the lower classes were paying out very little and the upper classes paying out more, but still not a ridiculous amount I think some people might go for it. I believe what we have now is a better option.

It could defiantly use some updates to fix the loopholes. But it's hard to agree with a flat tax because the people who worked hard in life and made great sacrifices to make more money in the long run should not be penalized. I believe it is completely unfair to tax someone at an outrageous level to return more tax money because they make more. If that is the case people should only look to achieve a comfortable salary and stop pursing greater things.

Some people also think we could do better with a fair tax system. Which is the same tax level across the board for all goods and services, and sometimes called a consumption tax. The good part about this type of tax is you get to keep your entire paycheck. But what is the downside? Well anything you buy or hire out is going to cost a flat fee tax fee of 25, 30, or 35 percent. Whatever the rate is set at for the nation. Many people also don't like the idea of fair tax because it's never been tried and it puts a burden on all businesses to collect the taxes and turn them into the government (Erb, 2015).

There are many different ideas for the best course of action when it comes to taxes. Two big name republicans, Trump and Cruz, both propose massive tax cuts and vow to balance the budget, but have offered only the vaguest idea of what spending they'd cut to make it happen (Gleckman, 2016). A lot of people have also said it would be best to get rid of the IRS, as it is a waste of money and the process is a nightmare. Bernie Sanders thinks that a carbon tax is a good idea. A carbon tax builds in a tax to burn fossil fuels, pretty much to encourage find more environmentally friendly and cheaper alternatives.

Personally, I think we need to consolidate a lot of our government agencies and use our resources better. And I am a government employee and I see that we mean well, but we waste a lot of money and resources. Also, we should greatly cut taxes rates for low and high income groups. Allow people do greater things with their money. Some of the greatest years in the United States for all people were when taxes were low and individual spending was high. But a good outcome only occurs when its lower for everyone. If you only lower it for the lower and mid-level classes and raise it on the upper classes it only encourages the wealthy people to spend less money until a more beneficial time (Moore, 2012). And has to benefit everyone. And lowering it for everyone is the best way to increase spending for all.

Erb, K. P. (2015, August 7). Our Current Tax v. The Flat Tax v. The Fair Tax: What's The Difference? Retrieved November 18, 2016, from

https://www.forbes.com/sites/kellyphillipserb/2015/08/07/our-current-tax-v-the-flat-tax-v-the-fair-tax-whats-the-difference/#523b338c1fa6

Gleckman, H. (2016, April 14). The Best--And Worst--Tax Ideas Of The 2016 Presidential Campaign. Retrieved November 18, 2016, from

https://www.forbes.com/sites/beltway/2016/04/14/the-best-and-worst-tax-ideas-of-the-2016-presidential-campaign/#377c4ea285e9

Moore, S. (2012, November 15). Why Lower Tax Rates Are Good for Everyone. Retrieved November 18, 2016, from

https://www.wsj.