Progressive Tax In America Essay

Every day Americans spend hours each year paying off their taxes. The true definition of taxes is expenses made from people and businesses that support the government and its services. The United States tax code has always been developing, which means the percentage of income leans toward to increasing income. Even though people have a higher income to pay more in taxes, they also have to pay a higher value for taxes. Although the United States tax system is unfair to society, the issues of the tax system are the progressive tax and equity.

The constitution allows that congress “shall have the power to lay and collect taxes, duties, imposts, and excises and to pay the debts and provide for the common defense and general welfare of the people”. In

America, a progressive tax represents the idea that wealthier citizens should pay extra of their income in taxes because of their better capability to pay without any serious difficulties. It is a tax that takes a greater percentage from the pay of high income payees than it does from low income people.

“For example, a person making $100,000 in a year might pay 25% of their income in taxes ($25,000 in taxes), while someone with an income of $30,000 might only pay a 10% tax rate ($3,000 in taxes)” (Roach, Brian). Mostly, taxpayers are put down into groups based on their taxable income such as: the more one earns and the more taxes they will have to pay once they cross the standard cut off points between the different tax bracket levels. The progressive tax is also a method that directs economic inequalities in a society. To evaluate a tax system’s influence on inequality, one must consider both the distribution of taxes paid and the distribution of the benefits derived from tax income. If the profits of programs funded by taxation mainly benefit poor families while high-income households pays for most of the taxes, then the tax system effectively functions as a transfer mechanism. Making the progressive system increase or changing the distribution of benefits allows better redistribution of economic wealth. A progressive tax system may yield a given level of public revenue with the least economic

impact. By society paying any of their taxes, any family must give up an equal amount of their spending on possessions, services, and even investments. Any family with higher income might only spend a fraction on goods and services, indicating to keep or finance a share of the money. Whereas a family with a lower income would tend to quickly spend the entire amount on needed goods and services, inserting $100 of increased demand into the economy. The money that a high income family invests does not add to the general level of efficient demand in an economy. Tax rate decreases on investment and that would mean more finances available for new businesses to get off the ground and for existing businesses to expand. “For example, tax rate reductions on businesses may mean more money after-tax for hiring more workers, paying them more, or purchasing more plant and equipment and computers that make workers more productive and efficient” (Moore, Stephen 1). Any tax rate reductions increase financing, which means that there are more funds presented for new companies to get off the ground and for businesses that already exist to start expanding.
Also tax efficiency, another issue of tax systems is equity. In a tax system, the equity matters if the tax is distributed fairly between societies. Vertical equity is the concept where a group of taxpayers that have a greater capability to pay taxes should pay for larger amounts. It is basically saying that the wealthy pay more in taxes than the poor. On the other hand, horizontal equity is the general idea that taxpayers with the same capabilities to pay taxes should pay the same quantity as everyone else. It is hard to attain in a tax system with dodges, inferences and inducements, because the existence of any tax break means that comparable persons do not pay the same rate. For example, the horizontal equity advises that a random married couple is forced to pay the same quantity of taxes like an unmarried couple with the same mutual pay. Initially, in 2004 President George W. Bush started a change of the United States tax policy that removes the consequence on taxpayers who were together as a marital couple.
Even though society has different views about the equality of the way taxes are organized, most people decide they would favor that someone else pays the taxes. Very few people are willing to pay more taxes. Society cannot work perform well without a sense of national unity, and that sense of shared purpose also rests on a reasonable tax system. If every American believed that government is unfair, then faith in the democracy will certainly die. Taxes are unfair in the United States and should be changed so that everyone would pay taxes equally.