Progressive Tax Pros And Cons

The essay topic that I have chosen is number nine, which was to define and defend the personal income tax policy that I would use. In researching plans it was difficult to choose between the current plan known as The Progressive Plan versus a plan many politicians and businessmen endorse known as a Flat Tax Plan. There is no clear-cut “winner” so to speak and both plans would need changes in order for me to endorse either of them in good conscience. That being said, a plan has to be chosen as this country could not flourish without some form of taxation. After much thought, I believe the United States should continue to use the Progressive Plan. In this paper, I will discuss some of the pros and cons to each plan, and will also highlight

The Progressive Tax Plan is a tax plan where the tax rate increases as income increases. In the United States we use tax brackets and put each of them in tax percentage ranges. Each range is taxed at a higher rate as the incomes increase. Therefore, as your income goes up your taxes do, too. In the progressive systems, you are allowed to take deductions to your taxable income for things like your mortgage interest, property taxes, childcare expenses, charitable donations, etc. A pro to this is these deductions can be used to lessen the taxes owed for individuals and families. These deductions and tax credits tend to encourage people to buy homes, investment in higher education and contributing to charitable organizations. Another pro to this system, in my opinion, is that it shifts the largest tax burden to those who earn higher wages and to larger corporations who are more able to handle this burden. A big con to this system we have seen is that many US businesses have relocated to other countries where they can pay less in wages and taxes and with a tax rate of 39.5% they will likely continue to do so. Another con is that it does not treat all citizens equally and many argue that to be

There would be no deductions or tax credits and less chance of tax fraud. In this system, the tax rate is set at a certain percentage. You would take your income, multiply it by that percentage and that is what you would owe the government. What seems like the biggest pro to this system is that it is simple and easily understandable. Another pro is that it would eliminate estate and gift tax. It is hard to tell if it would help or hurt the middle class as they currently pay on average 15-25% of their income to taxes. For many in the middle class, their taxes wouldn’t change drastically. However, a con to this system is that it would definitely help the rich get richer as most flat taxes are being estimated to be about 17% across the board. With higher income tax brackets now paying as much as 39.5%, they would owe less than half the taxes than they do in our current system. The biggest con seems to be that the poor would become poorer as they are currently paying on average 10% and would see an increase in their taxes. Another con to this system is that it would likely do away with many jobs since we wouldn’t be hiring tax professionals and not need as many IRS employees. A possible con to this plan is that charitable organizations would likely suffer, as well. Many businesses and people contribute and donate items to charities in order to lower the amount they