Taxes: Pros and Cons

Flat Tax

Pros: An even percentage of tax on all tax-paying citizens which leaves "investment income, such as capital gains, dividends and interest...tax-free". Deductions would be much less viable option, thus closing "controversial loopholes". Low-income families (household incomes with family of  four~$36,000) would be exempt from tax. A flat tax is argued to "remove the barriers to upward social and economic mobility". It is a simple system and corporations would not be able to lobby for loopholes. Also, incentive is increased when people feel as if their hard-earned money is not given away to the government because they do better (progressive). No double taxation, so encourages economic growth. Workers for the IRS would be cut and reduce federal spending.

Cons: Flat tax would eliminate the tax-exempt house mortgage deduction. Mortgage-interest deductions encourage people to buy homes, stimulating the economy. The DRI estimate "an average 12%-15% decline in the total value of residential housing in the U.S. would result  from a flat tax". Charitable contributions might decline as they would not be tax exempt. It would raise taxes on lower and middle class, but would lower the tax on the wealthy.

Statement: I do not support this tax because it would unfairly burden the lower and middle class with increased tax percentages, thus limiting the amount these consumers would buy as their decreased spending money would  be mainly spent on necessities.

Progressive Tax

Pros: The wealthy are more able to afford the higher tax percentages placed on them, thus decreasing the national debt faster and more efficiently. Lower-income people would be exempt or pay much lower taxes, allowing them to retain funds which would be spent on the economy, thereby strengthening it. Many of the wealthy "get off relatively easy when it comes to paying their fair share" partly because "much of their income is derived from investments". Allowing lower class citizens to keep more of their money means they will spend that on the economy, stimulating it.

Cons: It has been argued that "If wealthy Americans...saw their taxes increase...they would be less likely to invest their money by starting or expanding businesses". These "job creators", with their extensive funds and connections, would be less likely to create job positions in new ventures if they felt they could not afford it or would just be unfairly taxed for their successes. Others argue that there are only a small number of extremely wealthy people to tax, and those are running out so we shouldn't rely on their taxes to prop the federal government. The practice could be considered inherently immoral, as most rich people work hard for their money same as any other class.

Statement: I do not support this tax because it punishes the wealthy and encourages them to seek ways in which to evade their taxes, further complicating the system.

National Sales Tax

Pros: This tax would eliminate the need for the IRS, eliminate federal income tax for individuals and corporations and help low-income households previously without tax with a universal rebate on all tax-payers. This flat rate sales tax would tax those who buy personal goods or services, thus rewarding those who are thrifty and encouraging careful consideration before purchase. It is reported to eliminate "personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment and corporate taxes", but that this sales tax would raise the funds for Social Security and Medicare. The tax also simplifies the tax system and promotes predictability. It would also eliminate the double-tax on corporate businesses, thus encouraging them to invest in their companies and bring them back to the USA.

Cons: Could be argued this is a regressive tax, unfair to lower and middle class; these classes spend most of their income in necessities, whereas wealthier people can save their money which is then not taxed. Their is debate on where the sales tax percentage would be, ranging all the way to 60%. Others "wonder how the rebate system would be administered without a centralized system" as this tax proposes the elimination of the IRS. It is also mentioned that states with an older population would suffer heavier as they would pay a "double-tax" from previous income taxes. The transition would be rough then and would be unfair the the elder generations.

Statement: I do not support this tax because it is a regressive tax that does not take into account the lower incomes of lower and middle class, limiting the products they will buy and weakening the economy.

Value-Added Tax

Pros Many other countries have adopted this method of taxation. There is a lower VAT on necessity goods and services so that the lower and middle class are not as effected by this regressive tax. Proponents argue that VAT "is often not a decisive issue for investors, whereas corporate taxes are more decisive". The size and complexity of international and domestic corporate tax would be simplified with a VAT system. The suggestion of a VAT would encourage consumers to purchase goods and services before it came into effect. It could then be phased in over a couple years, thus encouraging consumers to become aware of saving and being thrifty.

Cons: It is a regressive tax that could further increase the burden on the poor and middle class. Also, the VAT is a less flexible system than the current income tax, and so "the U.S. Congress would be sorely tempted to [tweak and tinker with it]". Some argue that a personal income tax would need to be combined with a VAT system so it would offset the regressive effects of it.

Statement: I support this tax because it would indirectly tax the consumer, encourage corporations to return or stay in the USA and it would simplify the system and encourage consumers to become more aware of their purchases in order to save money.