Chapter 12 Reflections- The Design of the Tax System

The U.S. Tax System

Progressive Tax

This is a tax for which high-income taxpayers pay a larger fraction of their income than do low-income tax payers.

Flat Tax

A system that applies the same tax rate to every single taxpayer regardless of income bracket. 

Income Tax

A tax based on the the amount of income one earns.

Consumption Tax

All income that is saved would not be taxed until the saving is later spent. 

Now that you have had a chance to think about tax systems which type do you prefer - progressive, flat tax, income, consumption - there are quite a few possibilities.  How do you think the concept of equity or fairness fits into a tax system?

My Thoughts

I personally like the idea of a flat tax, that way everyone, no matter what their income, would pay their equal share of taxes, say 10%. I do not think that those making more money should pay an unequally larger share of their hard earned money to take care of everyone else but their 10% would definitely benefit those who were making substantially less money anyway. I am absolutely against the idea of a Progressive Tax. The Income Tax does not encourage anyone to work any harder or try to save more because the taxpayer knows that the Federal government is just going to take half of their money anyway. I do like the part of the Consumption Tax that encourages people to save and that when you do finally spend some of that saved money it is at that time that you are taxed. 

We are never going to get away from taxes. We all benefit from the use of tax dollars, whether it's driving down a nicely paved road, having protection from police or military, or just being able to appreciate the beauty of our National Parks. I think there are benefits and downfalls to each of these tax systems but We The People are lucky enough to be able to vote for our representatives who hopefully have our best interests at heart!

If you want to read more about government expenditures one source is the Economic Report of the President, available online here: http://www.gpo.gov/fdsys/pkg/ERP-2012/content-detail.html.