Taxes

"Value-Added Tax"

PRO: A VAT is easier to enforce than a national sales tax. It is possible that using a Value-Added tax would simplify business and personal income tax laws. It could be put in place of other types of taxation and also reduce the costs of tax compliance. It might to be able to eliminate tax returns as well. A VAT has the possibility of reducing or replacing an income or corporate tax. The tax is passed through the supply chain and each participant has an incentive to look for reimbursement opposed to charging the customer 10 percent and leaving the rest of the supply chain without charging a VAT. It makes no sense to cheat the tax because the punishment outweighs the benefits so using a VAT leads to less ax fraud.

-"But it's conceivable that a VAT could finance the lowering of corporate tax rates, substitute for raising personal income tax rates at the top or to take some people off the income tax roles."

CON: It entails higher administrative costs. A Value-Added tax might increase the cost of food and other necessities. Medical care might increase in price as well and people with less money will have a harder time. It is hard for some European Union leaders to actually apply the Vat laws. The middle class and poor will have a hard time with VAT because a larger proportion of their income will go into goods and services. The VAT is less flexible and potentially discourages consumption.

-"But I remain resolute: a VAT will not cure the budget and tax ills plaguing this country."

*I oppose a VAT because it increases medical care which is a major problem in our country.

"Flat Tax"

PRO:
People with more money who are potentially more successful are not being "punished" for making more money. Everyone would be taxes the same amount so there wouldn't be complaints from people who make more having to suffer because they "worked harder", saved more, etc. A flat tax is simple and it would encourage people to invest more money. People who really can't afford the higher taxes since it would increase for them could end up being completely exempt from paying taxes if they met the requirements which would benefit them. With a flat tax, it would be much easier for everyone to calculate their taxes each year and all complex loopholes in the tax system would disappear.

-"No matter how much money you make, what kind of business you are in, and whether or not you have lobbyists in Washington, you will be taxed at the same percentage as everyone else."


CON:
Lower income families and individuals will have to pay just as much as the rich and middle class therefore having a bigger burden on them. These families will not be eligible for all of the reductions that they are currently eligible for. There are concerns of a flat tax leading to a real-estate crash since the interest that people pay on their mortgages would be exempt when that deduction is eliminated. Homes would most likely depreciate in value. People will no longer get tax deductions for making charitable donations.

-"And why should the manager of a billion dollar hedge fund get her 20% piece of the profits tax free, while the people who deliver sandwiches to her have to pay tax on their salary and tips?"

*I support the Flat Tax because it is a fair and simple way to tax everyone in an equal and just way.


"National Sales Tax"

PRO: A National Sales tax would repeal income tax and others taxes as well. The Internal Revenue Service would end and lower income families could receive some kind of rebate if they were not being taxed under the current system. We would no longer be paying federal income taxes and things like Social Security and Medicare. It is estimated that personal savings would increase as well as investments. There would be higher production rates and higher wages.

-"If we want to create more jobs and grow our economy, the best thing we can do is to scrap the IRS and the current tax code and replace it with a simple, fair system."

CON: Switching from the current tax system to one that is consumption-based like the National Sales tax would pose many issues regarding transitioning. Lower and middle-class families would pay a much higher percentage of their earnings than those of a higher income bracket. Homeowners would be paying no taxes on their property while those who are renting would be paying taxes each month. People in high income brackets would receive a tax reduction while lower income families and individuals would end up much more in sales tax and other things. The tax burden would shift onto less-wealthy states. Elderly tax payers would suffer because they would have to pay a second tax once in retirement.

-"...on average, 80% of Americans in the middle- and lower-income ranges would pay as much as 51% more in sales tax than they currently pay under the income tax system."

*I oppose a national sales tax because only taxing based on consumption leaves a lot of room for inequality in certain areas that are not dependent on ownership of goods and property as well.

"Progressive Tax"

PRO: People who make less money have less of a burden because they have to pay less in taxes compared the the wealthy. Wealthy people are better equipped to pay and therefore it isn't that big of a deal if they contribute more. Allowing lower and middle-class tax payers to keep a larger portion of their income would benefit the economy more because they would most likely be spending that money. If the wealthy have to pay more each year it is only because they are making more money, much of which comes from investments, and therefore they are more capable of paying.

-"By not taxing higher-income earners at a high enough rate, supporters argue, the United States is shortchanging its own citizens of the benefits that could be gained from that money."

CON: The tax rate rises as the person max more money which is bad for high-income people. The use of a progressive federal income tax discourages economic growth. If wealthier people pay less taxes, they can start new businesses, invest in things, and take financial risks which would improve the economy. It is a lot more complicated than a flat tax system. When tax payers calculate taxes, it is a lot harder than if they were calculating for a flat tax. It is unfair to those who have worked very hard to get where they are and earn what they do if they get "punished" for it by having to pay more taxes.

-" 'We're running out of rich people to tax', Reynolds adds, noting that the current economic downturn cannot be fixed 'by taking the few surviving millionaires into oblivion' ".

*I oppose the progressive tax because it is unfair to those who work hard and make more money since they have to pay more taxes.