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Replacing the income tax with a national sales tax - Research Paper Example

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The current issue of great concern for stakeholders throughout the American society is with respect to updating and ultimately improving the current tax code. Many suggestions have come to light over the past several decades for the ways in which this could take place…
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Replacing the income tax with a national sales tax
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Download file to see previous pages As might be expected, one of the reasons for why a value added tax/sales tax/”fair tax” has not caught on within the United States is due to the fact that a preponderance of negative trade-offs exist with regards to implementing this. As a function of seeking to understand this issue to a more full and complete degree, the following analysis will present the reader with an understanding of the way in which a federal sales tax represents both positive and negative externalities and could ultimately harm many at risk individuals within the current society. Through such a level of argumentation, this particular researcher will seek to expound upon the complexities of a federal sales tax and the manner through which the trade-offs for this particular approach compare to the current income tax structure that currently exists. Although the analysis will most certainly go into a greater level of death concerning each of the pros and cons of a potential federal sales tax, figure 1.0 below helps to sustain sleep illustrate some of the key points that will be under discussion within this brief analysis. Figure 1.0 Trade-offs of a nation-wide federal sales tax structure     Pros levels the playing field between all tax payers   aids investments     benefits businesses     stimulates saving     eliminates IRS and the headache of "filing taxes"     Cons     disproportionate impact upon the elderly   disproportionate impact upon the poor     lack of deductions for expenses     depends too much on spending     increases potential for tax evasion   As can be seen, the main benefits that a federally mandated sales tax could incur would most certainly be with regards to leveling the playing field between all taxpayers within the system. The current system is one that places an undue level of stress upon certain individuals within society while others do not have any tax burden whatsoever (Jones 6). As such, a federally mandated sales tax would be a system that would invariably change this dynamic and ensure that each individual who participate in the economy would be a same rate. Another added benefit is with regards to the fact that a nationally mandated sales tax would in fact serve to increase investment. Due to the fact that investments themselves and savings would not be taxed, individuals would come to the realization that a heavy national sales tax burden would encourage them to save their money rather than spend it. By much the same token, a direct level of benefit would be with regards to businesses as they would no longer have the headache of engaging with the Internal Revenue Service and providing certain levels of withholdings (Ling & Petrova 371). Furthermore, it can also be understood that eliminating a federal income tax would also have the added benefit of doing away with an incredibly costly and inefficient Internal Revenue Service; a branch of the government that is recently come under a great deal of scrutiny recently for its unjust, unethical, and illogical political torment of those that have alternative views to the current administration. However, it must not be understood that simply eliminating the income tax is going to be a solution that invariably benefits each and every participant within the economy. For instance, the first and most salient concern is with regards t ...Download file to see next pagesRead More
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