The recent republican debates as well as the presidential campaign has been primarily focused on taxes and what a fair tax system looks like. An idea that has been around for years but never been implemented in America is the flat tax.
Currently, America has a progressive tax system with brackets for each income group. Each group corresponds with a percent of the income paid in the form of taxes. In other words, the more a person makes, the more the government takes. People from the lower, middle and upper classes work hard to earn their paycheck. Some just make more than others. It is not fair to tax the people who make more money simply because they have more money.
One major benefit of a flat tax is its simplicity. It is a very straightforward system that allows citizens to file their taxes with ease. Since a flat tax is relatively easy to report, people will not end up spending money on lawyers or accountants trying to file their taxes correctly. People have to find accountants to file their taxes in order to meet all of the IRS regulations and guidelines required with our current progressive tax bracket.
Another component that would be largely beneficial to the country is the fact that a flat tax promotes lower taxes, which then stimulates economic growth. If less money is being taken by the government, people will be able to spend more money on goods and services. Economic growth overall creates more jobs and higher paychecks.
The middle class is significantly affected by the progressive tax. Middle class citizens make just enough earnings to be put in a higher tax bracket. Yet, these individuals tend to struggle to make ends meet due to the high percentage taken by the government. Also, when tax returns come, the lower classes tend to receive the most money while they are the ones who pay the least throughout the year.
According to data from the latest tax year released by the IRS, statistics show that 86 percent of all income taxes are paid by the top 25 percent of income earners. Even further, the top 50 percent of income earners pay 97 percent of all income taxes. That leaves only 3 percent of all income taxes for the lowest 50 percent of income earners. Yes, the lower class makes less money, but this percentage is extremely low with most of the burden put on the middle and upper class.
Many of the countries such as Estonia, Latvia and Lithuania that have adopted the flat tax have all seen economic growth over the years. Clearly, the flat tax works to better the countries. The overall unemployment rate decreased for all of these countries after the flat tax was implemented.
Citizens who are against flat taxes argue that people in the lower classes are punished because, like the upper classes, they have to spend money on the necessities leaving less money for them to pay for taxes. While such an argument is understandable, the percentages will be equal with a flat tax meaning that if they do not make much, they will not have to give as much. This system may also cause the loss of jobs for the people of the IRS. These people are trained specifically with dealing with taxes. With a fixed tax, there is very little need for the IRS. However, this problem is minor in comparison to the problems that currently exist. Also, the IRS will still be necessary for other problems.
Much of the upper class has spent eight or more years of their lives in post high school education. Not only do they put in a lot of time and effort into their educations, but also take hundreds of thousands of dollars in loans. Those who go to medical school, law school or go into a graduate program tend to be the most in debt in the country, yet pay the highest percentage in taxes. Not that doctors and lawyers are better than anyone else, but why should those who go to school for eight or more years solely on loans be punished for their hard work?
Although there are pros and cons to any type of income tax, the flat tax is the most beneficial and fair to people in all classes. Everyone will have the same tax percentage no matter what income, lessening the burden on the middle and upper classes. While at the same time, the lower classes taxes will not greatly increase. A flat tax should be implemented in the United States after seeing the same theory work in many other countries.
