Reforming The United States Income Tax

The current tax code for the United States is almost 74,000 pages long. Or to put that into a different light: About 116 copies of Herman Melville’s Moby Dick. It is small wonder that a few of the announced candidates for President of the United States, have again begun to kick the tires on the topic of a Flat Tax. But is a flat tax actually a solution to our country’s growing tax complexity? What are the potential economic effects of a flat tax (both positive and negative)? Finally, is a flat tax even a viable solution? In short, will it work? As a concept, a flat tax is spectacular. Simplicity at its finest. As a fiscal policy, I believe that same simplicity must be examined and inspected closely.

The tax system in the United States has changed throughout the years, with many attempts to make it "fair" or "equal" while at the same time generating enough income for the United States government to thrive. It is a complex issue, and a controversial one at that. While it may not be possible for our tax system to ever be fair, it is important to make sure it doesn 't put more financial stress and pressure on one group than on another.

After the passage of the 16th Amendment, the nature and process of taxation changed many times. An author for the Virginia Law Review wrote in 1972, “Developing and maintaining an appropriate tax structure for a nation as economically complex and dynamic as the United States is a mammoth task” (Graetz, p. 1401). Because of this complexity, the nature of the Tax Code would need to be altered to keep up with what the country requires at a given time. Several significant changes have been made to the Tax Code, but none more significant than the passage of the Tax Reform Act of 1986 (TRA 86). TRA 86 was one of the most polarizing changes in tax law and where the current Code gets its name (Spilker et all., 2016, p. 2-11). It brought about more revisions than most people and businesses could keep up with, and it brought to light the deficiencies in implementing amendments to the Code, namely a disturbing lack of awareness from taxpayers of the alterations. Many businesses benefited from the changes—mostly large, well-established firms, but small mom-and-pop stores who have less stake in tax planning suffered (Scholes, Wilson, Wolfson, 1992, p.181). This negative effect would have been avoided if taxpayers had taken precautions and been aware of the impending changes in tax laws and if those changes had been communicated clearly to them.

The once necessary foundation of America has largely been politicized and corrupted. It has hurled its own citizens, in which relied on it, into perpetual hysteria, with little means of escape of its domination. Expatiated by a small handful of individuals is the only manner of controlling this trite of a foundation. This would be abolishing the IRS altogether. Everyone knows that the government establishments have been deteriorating for years, and quite frankly become evil. Maltreating its fellow inhibitors; sucking them dry. The IRS is no different. The IRS has been greedy and fluctuated its rules and standards to meet their satisfaction of their hunger, leaving many deserted and scared.

According to the researchers at CCH, “Without this patch…an estimated 21 million additional households would be subject to the AMT.” The AMT was designed so that higher income earners would have to pay some tax and not be allowed all the deductions and credits. However, the AMT has increasingly affected more middle income taxpayers. This is a really good provision that helps many families keep more of their hard earned income.

First I urge you all to fix our broken personal tax code, a tax code that because of complexity allows some to slip by at the expense of the government and the American people. Our current process of personal income taxation is so complex most Americans are clueless as to how much they are paying and where it is going. What the American people want is fairness, what the American people deserve is fairness, and what this body of congress has the moral obligation to provide is fairness. Not only do we need to eliminate loopholes and complexity but we also need to tax at a level of Austerity that is realistic for our spending. Asking senators, congressman, and congresswoman to try implementing policy that could potentially mean

“I love paying my income tax! This tax system is so easy to understand!” said no United States citizen, ever. No one has ever said this because it is highly unlikely that no one actually enjoys struggling with the complexity of the current income tax system in the United States. The concept of contributing to the good of the community, county, state, and nation through taxation is not new, nor is it generally opposed by American citizens. Most tax paying citizens do not take issue with paying for police and fire protection, roads, and national security with tax dollars. However, what they do take issue with is the fact that the current tax code is a complicated nightmare. It is a bureaucratic mess of rules, regulations, and perhaps even infringements upon personal rights. Because of the complexity of the current tax code, the United States should implement a flat tax system for personal and corporate income tax to ensure consistent and fair taxation and to render the tax code as more user-friendly.

The alternative minimum tax (AMT) was created to prevent high income level individuals from using deductions and credits to avoid paying federal income taxes (Tritz, 2015). Due to inflation AMT now spreads to include more individuals beyond the highest-income taxpayers and straying from its original objective. Consequently, AMT has affected the economy by over-complicating the already complex tax code, creating an additional obligation for taxpayers, and burdening more taxpayers than its original intention. This relates to our course content, which includes the calculation of AMT, the differences between AMT and TMT, the differences between AMT and the regular tax rate, and disallowance rules under AMT.

The congressional proposed tax changes will adversely affect the U.S. middle class. According to Pew Research, which claims to obtain its data through non-partisan demographic research and public opinion polling, the American middle class, defined as those making two-thirds to double the median income, makes up about half the population. Further information in this paper is obtained from reliable sources such as the New York Times and the Washington Post, which are typically regarded as center to left, As well as right-leaning sources such as Forbes magazine, whose chief editor, Steve Forbes, is a major Republican. The Congressional Budget Office and the US Census Bureau also supply reliable, researched data, and both Time Inc, Money, and

With today’s tax system, Americans feel like they are constantly shoveling their money out the door. People who object the flat tax system argue that it isn’t going to be able to fund the government, but most of us know that our government has a spending problem…not a revenue problem. “In 1970, the federal tax revenue was $192 billion; in 2010, tax revenue was $2.1 trillion – and it still isn’t enough money to pay for all the programs that politicians want.” ("Creators") With this new system, every income group would gain. Through the earned income tax credit, most low income Americans would be eliminated, benefiting the majority. In another sight the gains of the highest income group would be third highest among the six income groups. The income in tax variation and change in incentives would end up resulting in an increase of 1.8 percentage points for the economy.

In 1990, the IRS commissioned a comprehensive nationwide survey of taxpayers to obtain their overall perception of its administration of the U.S. tax system. NPM related questions from this survey were re-asked to taxpayers to determine any potential changes in response patterns (VanDenburgh 2004, 2). Several questions were re-asked to allow for an assessment of differences between the 1990 responses and the 2004 responses during research by William M. VanDenburgh (2004).

The United States tax system is in complete disarray. Republicans and Democrats agree that the current tax code is complex, unfair, and costly. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms (Armey 1). The main reason the tax system is so complex is because of the special preferences such as deductions and tax credits. Complexity in the current tax system forces Americans to spend 5.4 billion hours complying with the tax code, which is more time than it takes to manufacture every car, truck and van produced in the United States (Armey 1). Time is not the only thing that is lost with the current tax system; Americans also lose

Imagine that you’re on the prairie, with your family and friends, having the time of your lives, but suddenly, a police just come up to you. He calls your name and brings you over to the side to talk about the new laws that Donald Trump had assigned, like the immigration law. You're a Muslim, so this law affects you the most, and causes you and your family to move out from the U.S. Not knowing how to tell your family this, you walk out to your family with a disappointed face, with them asking, ‘What happened Jamir?’, and you have no answer. You see your grandpa and grandma who came just for this picnic, and right away, you know that you definitely can’t tell them, so you go to your siblings and tell them the problem. They also look around for

Over the past decades, the number of AMT taxpayer have been constantly growing, especially among the middle income class. According to Bruce \& Liu (2014), one reason for the rapid expansion of the AMT is that the AMT tax brackets are not inflation indexed whereas the tax brackets, exemptions and standard deduction under the regular tax system are periodically adjusted for inflation. Besides lack of inflation indexing, tax cuts during the early 2000s reduced tax liabilities under the regular tax system for many households without a corresponding adjustments for the AMT. The combination of lack of inflation indexation and tax cuts have pushed the AMT towards millions of taxpayers and made it an increasingly important factor in the U.S. income

One proposal for the lowering of taxes in the United States is Herman Cain’s 999 Plan. Herman Cain is a republican politician running for president in the year 2012. The 999 Plan is a tax reform plan that would change personal income tax, national sales tax, and corporate sales tax all to nine percent. (Astor) The argument for the plan is that it would strengthen the economy and create jobs because it would lower taxes by 26 percent on businesses, therefore giving them incentive to start hiring, therefore creating new jobs for Americans. Currently the United States Unemployment rate is at 9.1 percent. Also corporations would be more willing to bring their profits home due to the lower