Reform the tax system to make it more fair
Some take it is an amusing cliché, but it’s a fact. The only things in life that are sure are death and taxes. No matter how citizens of a country may hate paying taxes, one way or another they have to render to the government the things that are the governments. That is, they must pay taxes either directly or indirectly.
Every government need taxes
No government of whatsoever ideology can provide for the needs of its citizens without support, or taxes, from those citizens. People want better jobs, healthcare, housing, education, security, and so on, but these cannot be provided without the wide community contributing to the national coffers.
Taxes must be applied equitably
However, taxes must be applied equitably, meaning those who pay taxes should pay according to what they earn or acquire. The payment of taxes is not equitable if the rich collectively is paying less than what the poorer class pay collectively.
Complicated reshuffling
The new tax policy announced by the Republican majority in the US House of Representatives last week, is not a reform of US tax policies, as claimed. The proposed is a confusing, complicated reshuffling of the responsibility for paying taxes. In one instance, it seems like those earning mid-level incomes will pay less income-tax, but in another instance when these people file their taxes they could have less to claim as deductions, so they would likely receive less in tax refunds. Well, that seems like paying more taxes.
In another instance, the rich seem to be asked to pay more taxes based on their income brackets, but in yet another the rich would benefit significantly from not paying taxes on very lucrative real estate they acquire as the bequest from the death of a relative.
The proposed policy is being praised as beneficial to the US economy, but how will the government finance the needs of the majority of Americans when it cut taxes significantly? Should taxes be reduced to the extent proposed, there will be a glaring gap in the government’s revenue. To bridge this gap, the government must therefore cut some vital programs that people depend on, or operate the nation’s economy on a major deficit.
Crucial social programs could be reduced
There are indications within the recently proposed tax policy that crucial social programs like Medicare, Medicaid, and the Affordable Care Act would be reduced to bridge the gap created by the tax cuts. However, cutting back on critical social programs places heavier burden on the more vulnerable in the society. They will need to find additional income to meet benefits being taken from them.
Analysis of the proposed policy also indicate the national debt could increase by trillions of dollars if the policy is approved. This would be bad for the national economy setting it up for another economic recession.
National system need to be reformed
What America really needs is for the national tax system to be reformed. The current system, driven by income-tax, is not equitable and subject to costly loopholes. The system makes it too easy for people to under report their income, and places too much burden on those in lower income brackets
For some time, several economists have suggested replacing the income-tax driven system with a national consumption tax. In this way consumers – rich, middle class, and poor would pay a flat tax on whatever they purchase, except on basic food items and vital services, while contributing to the national revenue.
But such a blanket consumption tax, still wouldn’t be equitable, since the rich spend less frequently on general consumer goods than citizens in middle and lower-income brackets.
Other economists argue a more equitable policy would involve income tax placed on those in higher income brackets. Those earning below these brackets wouldn’t pay income tax. However, a consumption tax would be applicable across the board, except on purchases of certain vital goods and services. This argument also postulates higher consumption taxes on goods and services considered “luxury,” purchased predominantly by the rich.
The problem with reforming the American tax system is that no president, nor Congress seem bold enough to lead the reform of the system. But until such a reform is accomplished, the system will remain inequitable and unfair, and the poor will continue rendering more to Caesar than the rich.
More on US taxes: IRS warns of serious scams as 2017 season begins
