THE TAX REFORM REVOLUTION

The Tax Reform Revolution





The Main Idea of This Article

After a sequence of alters in the rates of the tax and various complexities in the codes of tax, it's now a time to repair the traditional system of the federal government regarding tax laws. Tinker with the rates, or a loophole would not be satisfying now. The article wants to move along the process from the four major alternative approaches of fundamental tax reform.

Major changes in the income structure of the country would introduce a new form of Federal tax that is based on the consumption rather than income. For years economists have debated the merits of income and consumption as a basis for taxation. (Weidenbaum, 2009)

Many analysts consider that the tax paid by the people on the part of the production companies of which products they consume, is lighter than the tax paid by them on what they contribute by working and investing. This position seems to rely on the theory of decreasing marginal, which states that the value an additional dollar of income for an individual is decreasing gradually as income increases. However, even assuming that theory is applicable in the tax area should be must assume that it is possible compare utilities between people to conclude that need to impose graduated tax rates. (Weidenbaum, 2009)

The Important Facts

The facts that support the main idea of the article that a new reform system of tax regulation should be implemented in the economy are following:

To increase the growth of economy by encouraging investment and savings

Simplifying the loads of tax

Shifting the tax base to consumption from income

Information or Ideas Discussed in the Article

The four approaches to tax reform are discussed in the article, these are: flat, USA, national sales, and value-added. All of the four approaches will shift the foundation of the system of tax collection from income to consumption at the same time simplify the procedure of complying with laws of tax.

The Flat Tax

The flat tax would form a consumption tax, as income from savings and investments would not be taxed. Tax would be paid only on pensions and wages. Dividends, interest, and capital gains would be accepted from taxpayers individually based on the justification that the proper taxes have been levied at the level of business. Therefore, it would avoid the double taxation. There would be no deductions, but, it ...