Compare And Contrast Progressive Tax And Flat Tax

The flat tax, progressive tax and value added tax are three very different and unique tax systems. All three tax systems have similarities and differences. By comparing these three tax systems we can understand their advantages and disadvantages and see which one is the best for the United States. Currently, the United States uses an income tax called the progressive-rate tax system. This tax rate system is very complex and requires taxpayers to complete multiple forms, compute deductions, and manipulate tax laws until it becomes beneficial. Another tax system is the flat tax, which is probably the easiest tax rate system of the three because it is a single tax rate that is applied to an entire population base regardless of income level. A …show more content…
The very structure of each system is so different, but similar in the fact that they all have one goal in mind, acquire the most tax revenue possible. For example, the value added tax in a consumption tax system, which is different then both the progressive tax rate and the flat tax. Those tax systems are both based on the individuals’ income, therefore classifying it as an income tax. This paper compared many features including: the structure of each system, both income inequality and equality between them, and economic growth among the systems. There are flaws and merits to every tax system. The goal is applying the correct tax rate system to make everyone happy. However, that is the problem, making everyone happy is not feasible. Therefore, a simplified version of our current progressive tax rate system is the best choice for the United States. The current system has great advantages, such as income equality and high government revenue. Without the revenue from the progressive tax system it would be impossible to fund unemployment and welfare programs. The progressive tax has its disadvantages which including being an extremely complex system that is hard to interrupt and the issue of social class discrimination. A well designed tax policy with specific tax cuts to the middle class will improve economic growth. With the application of base broadening to current tax bases it will improve the issue of social class discrimination and bracket creeping. Completely changing the current progressive tax rate system to a new system would shock the United States economy. If we switch to the flat tax system, to tax the upper class the tax rate would be to high and put a burred on the middle and lower class. Also, the flat tax system does not generate as much tax revenue as the progressive tax. So current programs like unemployment and