The federal government of the United States of America should replace the present income tax system with the flat tax. The question arises: why to replace and what benefits does flat tax give the country? In contrast to income tax system, flat tax is simple, efficient, fair and good for worth as it exists only in two forms: one tax for labor income and one tax for other capital and business income. Economists argue that income tax system discriminates based on the level of income, the source of income and use, whereas flat income offers equal treatment to taxpayers.
Present income system seems to punish people, but they contribute to the nation’s wealth, whereas flat tax would lower marginal tax rates and would eliminate tax bias. Flat tax is argued to ensure better economic performance in highly competitive business world. In particular, proponents of flat tax argue that flat tax ensures economic growth and fairness. Present income tax system is associated with high rates, discriminatory taxation, reduction growth rates, destroyed jobs and lowered incomes. (Mitchell, 2005)
Of course, flat tax won’t solve the whole problem of damaging impact of taxes, but it will dramatically lower tax rates and will put an end to tax code’s bias. As a result, economic performance will be boosted. Flat tax will foster increased jobs, investments and savings. Economic long-term growth will be spurred by engaging productive economic behavior. Further, flat tax supposes that all people are treated equally. The tax cod won’t punish success and won’t discriminate citizens on their income basis. The next benefit is that flat tax aims at eliminating loopholes, deductions, exemptions and credits.
It means that politicians will be deprived of opportunities to pick winners and losers, to reward their friends with tax exemptions and to punish enemies with imposed tax rates. Thus, flat tax will put an end to political favoritism and micro-managing. Rates of political corruption would be decreased as well. Summing up, in contrast to present income tax system, flat tax is consistent with the principles of fairness, simplicity, and efficiency. (Mitchell, 2005)
Works Cited Mitchell, Daniel. (2005, July 7) A Brief Guide to the Flat Tax. Available on-line from http://www. heritage. org/Research/Taxes/bg1866. cfm Accessed November 1, 2008.