[IS A FLAT TAX RATE SYSTEM FEASIBLE?]

By

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

Table of Contents

I INTRODUCTION1

Introduction to the Problem1

Statement of the Problem1

Purpose of the Study2

Rationale2

Research Questions2

Significance of the Study3

Methodology and Research Design4

II LITERATURE REVIEW5

Alternative Minimum Tax6

Other Countries using a Flat Tax System7

Pros and Cons of a Flat Tax System10

Effects on our Government10

Accounting and other effects11

III ANALYSIS OF FINDINGS19

IV CONCLUSION26

V RECOMMENDATIONS29

I INTRODUCTION

Introduction to the Problem

According to Congressman, Michael C Burgess M.D. (R) in an official press release, it was found that in 1913 we had 400 pages in our code; today that number has grown to over 65,000 pages. That is nearly a 17.000 % increase. (Burgess, n.d.) Our current tax code is becoming more complex every year. Our tax code requires many Americans to pay a professional to interpret and complete a tax return. Tax professionals can better interpret the code for many businesses and certain individuals. The cost associated with this can be expensive.

Statement of the Problem

Every year it seems our government agencies are getting deeper in debt. According to a directory (About.com) the U.S. revenue is collected from a combination of individual and corporate taxes. This totals 65% of the revenue. The remaining 35% is from Social Security and Medicare payroll taxes. This amount increased from $837 billion in FY 2006 to $1,138 billion in FY 2012. Of that, only one-fourth was used to pay benefits to current retirees. Taxes will be one the biggest political issues for the next few years. It would be worth it for us to understand our current tax system so that we can better arrive at a decision on the implementation of a Flat Tax Rate System. (Journal of Accountancy, 2011)

Purpose of the Study

The purpose of this study is to delve into the Flat Tax Rate System and other Tax Reform Policies being reviewed by the United States Congress. In taking a more detailed look into our country's current complex tax system we can endeavor to bring information together and try to make a informed decision that will help our county's individual citizens, small businesses, big corporations and our government's bottom line.

Rationale

With our economy today many are talking about our current tax system, which is a “Progressive Tax System”, and if it is fair. A “Flat Tax Rate System” has been suggested and been the review stage for more than a decade by proponents and Congress, but nothing has been implemented. Is it time to take a “Flat Tax System” more seriously? With all the cuts to make this year's budget work the U.S. Government is looking for more ways to ...