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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when congress passed an act that included an income tax on individuals to help pay for war debts; this tax was later repealed.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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Wilson lowered the tariff rates 25% on average; it is to encourage the government to raise national revenue. He was also set the income tax become 1% in Sixteenth Amendment in early 1913. The 1% income tax was for people who have income exceeding $2,000 for a single taxpayer and exceeding $4,000 for a family. This rule was only taxed

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The following year, this tax was deemed unconstitutional due to the fact that the tax was direct, not at all connected to the population of each state. The 16th amendment was the result of the U.S. Supreme Court’s decision to declare the flat rate Federal income tax unconstitutional. Between 1909 and 1913, government earnings came from tariffs, which were placed on imported products. “The burden of these taxes fell heavily on working Americans, who spent a much higher percentage of their income on goods than rich people did” (“The Income Tax Amendment: Most Thought It Was a Great Idea in 1913” 1).

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Just like in Rome the United States has increased its taxation rate over the years. Now Americans are taxed on just about anything that they buy or the money they earn. Americans have to give up some of

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”(6) The 16th Amendment stated that “Congress shall have the power to lay and collect taxes on incomes, from whatever sources derived, without apportionment among the several states and without regard to any census or enumeration.” (7) As a result of the 16th Amendment in 1913, because of exemptions and deductions, no more than 1 percent of the population paid income taxes. Tax rates started out at 1% and rose to 6% on income over $500,000. (8) With the 16th Amendment being passed through the necessary steps before becoming a constitution law, the federal government was allowed to enforce taxes on its citizens and people making money.

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This encourages individuals to work and the more the individual earns the benefit gradually reduces. Additionally, another strength is that many individuals will benefit from a monthly payment, this may encourage individuals to learn to budget this payment to be able to calculate when bills are due and when to pay them without spending all their money at once and having no money left over for

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In this essay, I will show some of the benefits of implementing a single flat income tax. I will also some of the effects the flat tax will have on the lower class, middle class, and the upper class. I will then show the effects of implementing a flat tax on the United States economy. The annual cost of compliance in America is $370 billion.

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The benefits to middle class and poor include paying the working poor more under the income tax credit and the most importantly improving education. Improving education is the most important because the high school dropout rate has been declining since 1990 meaning more people are graduating and going to college (National Center for Education Statistics) . The people with more education believe in the American Dream and are more likely to outearn their parents (Bump). Improving education and creating opportunities will help the economy because more people are knowledgeable on what could help and hurt the economy. Educated people believing in the American Dream is a great combination for the economy because the person will do whatever it takes to earn more than their parents giving more to the

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“The Federal tax system has always served purposes beyond the collection of revenue to fund Government programs” (Farrigan). The people of the United States pay taxes to the government to multiply the money by doing business related negotiations with other countries. In addition, the government uses the peoples tax money in programs such as Medicaid or children’s health insurance, food stamps, and unemployment benefits. Consequently, the government gives back the people’s tax money, but because of the people the government can support, give, and help the people in need. The government multiplies the peoples tax money and since the people are investing their tax money than is only right the people get a beneficial raise on their tax return money.

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