Professor Dr. Jan D. Felton
ACC 307: Federal Taxation
December 5, 2014
Our federal taxation system has been among many debates within our political environment as a nation. Tax reform has been brought up numerous times during committee hearings and important political debates, but is there a real solution? Should the flat tax be implemented or shall the United States retain the progressive tax rates we currently have in place? Ultimately, I feel that a flat tax is just not the correct course of action for this country because it widens the gaps in income we have within our nation. Change or reform if you will is surely needed, but using a flat tax rate system is just not the solution to deal with our current problem. Our nation currently prescribes to a progressive tax system, and this has worked for many years, but now it has outlived its intended use because of outside influences. For instance, there are many loopholes and additional deductions that are offered in order to offset income to those that ordinarily would be placed in a higher tax bracket, if it was not for these loopholes. I do not think a flat tax is the answer to our tax problems because it would unfairly tax those at lower incomes the same it would those with larger incomes. Flat tax in-turn will cause the poverty-ridden families across our nation to be hit harder in the wallet, thus putting them further in debt, and at the same time those with much higher incomes will not be as affected by the flat tax rates because they will most likely be paying less than they are currently paying in the progressive system. Our current taxation helps protect people during bad economic times because if their income drops, they fall into a lower tax bracket. Falling into a lower bracket means you owe less to the IRS. However, keeping our current progressive taxation system may discourage people from entering higher paying work fields because so much of their potential income would be taken away in taxes. Proponents for flat tax rates argue that progressive systems are against the Constitution because it does not constitute strictly equal treatment of all (A Flat Tax is Patently Unconstitutional, n.d.). Additionally, progressive tax allows for money to be distributed more equally, and lower income families are more protected. Progressive tax system allows the government to have a steady stream of an income year round. Many people know that the tax systems are complicated, and each has their pros and cons, as it stands though the progressive tax system is still one of our best choices for the United States. U.S. citizen’s benefit from a progressive tax system due to many reasons, one example is tax fairness. If we were to implement a flat tax system, those with low income would be paying the same amount of taxes as those who earned much more income. A flat tax punishes the poor because the rate of tax represents much more of their usable income.
“The tax code has become increasingly complicated and unfair. Under today’s tax laws, those who can afford expert advice can avoid paying their fair share and interests with the most-connected lobbyists can get exemptions and special treatment written into our tax code. While many of the tax incentives serve important purposes, taken together the tax expenditures in the law are inefficient, unfair, duplicative, or even unnecessary. In fact, because our corporate tax system is so riddled with special interest loopholes, our system has one of the highest statutory tax rates among developed countries to generate about the same amount of corporate tax revenue as our developed country partners as a share of our economy; this, in turn, hurts our competitiveness in the world economy” (Reforming Tax Code, n.d.).
Due to all of the loopholes that many exploit there drastically needs to be a tax reform, but a reform is what is needed, not a tax system switch to a flat rate system.