Progressive Income Tax Cons

The third and final tax system to be evaluated for pros and cons is the no income tax system, which is implemented in nine states: Alaska, Florida, Nevada, South Dakota, Texas, Wyoming, New Hampshire, and Tennessee (New Hampshire, and Tennessee pay an income tax on dividends from investments). First, a no income tax system is exactly what it sounds like, there is no income tax to be payed to the state. Are these states at a disadvantage because they do not have an income tax? The answer to this question is no because these nine states make up for the lost revenue from not having an income tax in other ways. Let’s look at two different examples of how states make up for the lost revenue with Texas and Wyoming. Texas makes up for the lost revenue …show more content…
The pros of the progressive income tax is that it can be very flexible, it does not put an overwhelming burden on the lower earning income brackets, and it can raise a large amount of revenue. The cons of the progressive income tax is that if the highest tax bracket is too high, it can be viewed as unfair, especially by the wealthy because they have a higher tax rate than everyone else. The pros and cons of the flat tax system are fairly straight forward. The pros are that the flat tax system is very simple, and it treats everyone equally because everyone pays the same percentage of their income in taxes, so it is fair. One of the cons of the flat tax is that it is very rigid once in place, meaning if the government wanted to change the tax to a higher or lower percentage, they would have to apply that percentage change across everyone, otherwise it would not be considered a flat tax. Another con is the flat tax system would not lessen the tax burden on the middle and lower class income levels while it would lessen the burden on the higher income earners. The pros and cons for the no income tax system are more hidden than that of the flat and progressive tax systems. The no income tax system pros are; people do not have to pay income tax, the tax base is broader because most no income tax states rely heavily on sales tax, which everyone pays when they purchase goods. There are two big cons with having no income taxes. One con is even though there is no income tax, the state makes up for this lost revenue in other ways like higher sales and property taxes, so the people are paying the same amount in taxes; it is just not called an income tax. The other big con is the lower and middle class income earners pay a larger percentage of their income in taxes through the sales tax because everyone pays the same amount in tax when they purchase