Pros And Cons Of Income Tax

The federal income tax that has been used in the U.S. for most of the twenty-first century has been in place ever since 1913. Today, the sources of federal tax revenue from taxes are collected from individual income taxes, Social Security and other payroll taxes, corporate income taxes, excise taxes, and estate and gift taxes. Over time politicians and scholars have suggested ideas of switching to consumption based means of taxation many times but it hasn’t been well supported until the past five or six years. A consumption tax, which has many names and variations such as the “VAT” tax or “Fair tax” is the idea of a tax that eliminates all federal taxes listed above and solely taxes on the consumption of retail goods. Most countries, especially …show more content…
The new consumption tax reforms have driven scholars to think about the advantages and weaknesses of an ideal income tax. Usually, the fair tax is considered to be fairer and simpler. Consumption tax advocates criticize the income tax because of it 's inability to measure the fairness of one 's lifetime wealth. Because of the tax now, an individual that earns and consumes early in life is faced with a lighter tax, when an individual that consumes less and earns more income but later in life is burdened with a heavier tax (McNulty, 2147). A consumption tax is more fair than an income tax simply because it taxes consumption, not production. The average person pays between 15-20 percent of their income to the government as taxes. The consumption tax removes the situation of over-taxation on saved income and taxes people fairly. Said to be the most liberal philosopher of the 20th century, John Rawls wrote in justice as Fairness that "a tax on consumption at a constant marginal rate” was the best tax system (Dubay). Because it is a flat rate tax on consumption, it would be regressive, especially compared to the current tax system where the tax rates rise with the incomes …show more content…
After further thought they renamed it as, "fair", to persuade the people of America. If the tax was put into place, individual tax returns would be removed and the burdens of the present tax system would disappear. But if an individual tax return were required, for progressive equity, personal tailoring, incentive, relief, and other reasons, it would not be simple. A consumption tax can be easily twisted by future congresses eager to raise it in return for favors handed out to a certain group of the electorate. Politicians get themselves elected to play with the tax code (John). The title is ironic because there is nothing more unfair than having to pay an extra tax on every crumb of food you eat, every shirt and every new pair of shoes you