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Federal Income Tax Vs Flat Tax

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Economics Tax Paper This economics research paper will discuss and analyze the current United States Federal income tax and a flat tax, as well as the positives and negative of each income tax system. The Federal government’s ability to tax the income of individuals was made official in 1913 when the 16th amendment was ratified. But, the income tax on individuals has been around since 1861, when congress passed an act that included an income tax on individuals to help pay for war debts; this tax was later repealed. In 1894, congress enacted a flat rate Federal income tax system, although it ended due to being considered unconstitutional. Reorganization of the current Federal income tax came in the 1950’s.
The United States …show more content…

An advantage would be that it decreases the worry of high taxes on low income citizens who can barely afford the expenses of everyday life. This system has the ability to collect more taxes than any other tax system, which is an advantage as well. Another advantage is that it allows people with more resources to fund a larger portion of services all citizens and businesses need and utilize. But, along with advantages, there are plenty of disadvantages. One disadvantage is that some people consider progressive tax systems to be singling out wealthy people, which discourages equality in the government. Also, it causes some to lose the will to earn more money, because that means they will have to pay more towards taxes. Crystal Lombardo says, “Inflation causes more people to lose income value and pay higher taxes” (Lombardo 2015). So the money a person makes, has less value to it. Most Americans do not like this tax system for obvious …show more content…

The biggest advantage is definitely that it is extremely simple compared to the progressive income tax system. Also, it is easier to understand, and to report (Meehan). Taxpayers save the cost of having to deal with current the Internal Revenue Service (IRS) regulations, which is another advantage. Another positive is the flat tax eliminates double taxation of savings and dividends (Meehan). Also, this tax system lets the United States compete more evenly with other markets in different countries (Meehan). One more major advantage is that it does not discriminate based on the amount of money an individual makes, everyone pays the same tax rate (Meehan). These are just a few advantages, there are plenty

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