Wednesday, December 08, 2010

Pros/Cons Of Income Flat Tax

Now that President Obama and GOP leaders in the Congress have reached an agreement on continuing the Bush tax cuts and extending unemployment benefit, the US federal deficit will continue to grow over the next year and at some point a flat tax may be needed to help payoff the trillions of dollars of debt that has been rung up by politicians for decades. What are the pros and cons of a "flat tax" rate for all Americans? The pros are the simplest to explain, because unlike the current tax system we have today - a flat tax would be devoid of tax loopholes and write offs in favor of all Americans paying the same percentage of tax on the dollars that they earn. Another thing on the pros side of the US adopting a flat tax rate would be the ease of the system.

The cons of the US going to a flat tax systems mainly effect ideologues on the right and left, who love to social engineer people in the USA to their way of thinking. Liberals want to use the current US tax code to push Climate Change issues, while conservatives want to use it for business friendly ideas. The biggest thing on the cons side to a US based flat tax would be that it would put hundreds of thousands of people out of work almost immediately. From our local tax accountants, to most IRS employees, the need for their services would disappear - if a flat tax really happened in the United States.

The current US tax system is not complicated by accident, in the same way laws are written in a way a none lawyer cannot comprehend. The reason the US tax code is complicated is to not only help politicians push their ideology on the rest of us, but it is also purposely kept complicated in order to preserve the jobs of some pretty influential people. While the pros and cons of a US federal government flat tax will continue to be debated from time to time, in reality I see no chance whatsoever that Congress and the President will want to change the current system - which enables them to control so much of the decision making of everyday Americans.

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