Top Ten Things that Could Reform the U.S. Tax System
It's no secret that most Americans gate our tax system. Some say we are taxed too much, while other people think we aren't taxed enough. Here are some tax systems that could be implimented in the U.S.The main proponent of this tax was Henry George. Basically, this tax is similar to property taxes, except the value of your home isn't taxed. The value of the land your home is resting on is.
The reason this tax has so many supporters is that it could lead house prices to drop. Some investors buy large amounts of vacant property and hold it until they can sell it for a profit. If this tax is enacted, it would discourage this type of behavior, leading to less homelessness and lower housing prices.
The amount of revenue this tax could raise, the rate the tax should be, and who should pay the tax are all still being debated. The tax has become so popular that a new political group that supports it has risen. They call themselves geolibertarians.
Geolibertarians believe that land is given to all of us and cannot truly be owned, only rented. Thus, we should all pay rent on the land that we inhabit. This is obviously a very controversial but promising form of taxation.
The way this tax would work is very similar to income taxes. The only difference is that everyone would be able to deduct any funds they used for investment and saving. The money that they used for consumption is the only amount that would be taxed.
Many economists believe this form of taxation is more fair than our current system because it does not penalize savings and investment.
You most likely live in a state that collects sales tax. This is the same thing, but it would be administered by the federal government. Supporters state that, depending on the rate, this kind of tax could raise enough revenue to significantly lower or even eliminate most or all income taxes. This would make paying taxes much simpler.
Others state that the tax is regressive and that we should enact a progressive consumption tax instead.
This would be similar to an income tax, but instead of one's income being taxed, their entire wealth is. For instance, Bill Gates makes around $2 billion a year, but he's worth around $80 billion. Normally, he would only pay taxes on his $2 billion, but under a wealth tax, he would pay taxes on his entire $80 billion.
Supporters say that this could raise enough revenue to lower taxes for the middle class and help lower income inequality. Others state that it will discourage investment and is unethical because it mainly targets the rich.
A flat tax is an income tax where all income is taxed at the same rate. Proponents argue that this will encourage investment and will make filing taxes much simpler. Opponents state that the poor and middle class will be disproportionately affected and that the federal government would have to make large cuts in order to pay for it.
This tax is aimed at high-frequency trading done by Wall Street. The rate would probably be a fraction of a percent. Proponents argue that since Wall Street received a bailout, they should begin to pay the American people back. They also state that the U.S. had a similar system in the past, and the economy boomed.
Opponents state that it will discourage investment and that most countries that have enacted this tax have seen negative effects.
This would be a form of excise tax aimed at helping protect the environment. Proponents state that it can raise significant revenue while protecting the environment. Opponents state that this tax could disproportionately affect the poor and middle class.
While some states have this, the federal government does not administer it. It is similar to the estate tax, except that the estate tax is paid by the deceased person's estate, while inheritance taxes are paid by the receivers of the deceased's gifts.
Basically, under this system, taxation would be abolished in favor of voluntary donations to the federal government. Proponents say that taxation is theft and that this system would be more fair. Opponents state that huge cuts would have to be put into place in order to pay for this type of system.
The Newcomers
Basically, a VAT is very similar to a National Sales Tax. Proponents state that many European countries have some sort of VAT and that it will make paying taxes easier. Opponents state that it is regressive and could hurt domestic producers.
Every single person who has income needs to pay at least some tax. Currently, those earning under a certain amount pay zero federal tax, which is extremely unfair. Even if it's a small percentage, everybody should pay at least something.