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Flat Tax vs. Progressive Tax

Flat Tax vs. Progressive Tax

The Progressive Tax system of the United States of America has been in place since the time of Abraham Lincoln. Many people argue that the progress tax system is unfair because tax rates create more of a burden on lower income wage earners. Reform is being considered, one plan is the Flat Tax, which states everyone will pay at the same tax rate.

 

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Julia Ebel

Julia Ebel

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Article: cain's 9-9-9 plan exposed
Source: cain's 9-9-9 plan exposed

Progressive taxation system: A brief study on its pros and cons

Progressive taxation is a tax system used mostly in the US and the European countries. Progressive taxation levies taxes according to the individuals’ income. This means that an individual with high income will pay more in taxes than an individual with a low income.

Article: cain's 9-9-9 plan exposed
Source: cain's 9-9-9 plan exposed
Julia Ebel

Julia Ebel

11 Knowledge Cards 

Background Information:

The Progressive Tax system of the United States of America has been in place since the time of Abraham Lincoln. Many people argue that the progress tax system is unfair because tax rates create more of a burden on lower income wage earners. Reform is being considered, one plan is the Flat Tax, which states everyone will pay at the same tax rate.

PROMPT: Determine which tax system you endorse, either Progressive or Flat Tax. Explain the similarities and differences between the two tax systems. Be sure to evaluate how each system of taxation functions and describe the positive and negative effects on the citizens of the United States. 

Guiding Questions:

1)      Explain what progressive taxation is and how it works.             

2)      What factors do the progressive taxation system rely upon and how do their factors affect the tax rate for the American citizen?       

3)      Compare the advantages and disadvantages of the progressive taxation system and how it effects American society.

Reply

Flat Tax:
In tax terms, "flat" simply means everybody pays the same rate; there is no graduation in the rate structure. If you graph income levels versus tax rates, you get a "flat" line. The "flat tax" is a tax on income with a single uniform rate and a standard deduction.

Article: Tax Terms Glossary - Amer...
Source: Americans For Fair Taxati...

What Is a Flat Tax?

Unlike the current system, a flat tax is simple, fair, and good for growth. Instead of the 893 forms required by the current system,[4] a flat tax would use only two postcard-sized forms: one for labor income and the other for business and capital income. Unlike the current system, which discriminates based on the source, use, and level of income, a flat tax treats all taxpayers equally, fulfilling the "equal justice under law" principle etched above the main entrance to the U.S. Supreme Court building. And unlike the current system, which punishes people for contributing to the nation's wealth, a flat tax would lower marginal tax rates and eliminate the tax bias against saving and investment, thus ensuring better economic performance in a competitive global economy.

Article: A Brief Guide to the Flat...
Source: Heritage Foundation
Julia Ebel

Julia Ebel

11 Knowledge Cards 

1)      Summarize this paragraph (above, beginning with "Unlike the current system...") in your own words.

2)      Analyze and explain the difference between a national sales tax and a flat tax.        

3)      Rate the six major features described in the article in order of importance in your judgment. State your reasoning for the order you have decided on.

Reply

So the tax system is moderately progressive until you get up to the 5,000 richest people in the country, at which point it becomes regressive.

However, this includes only federal income tax and payroll taxes. It doesn't include excise taxes, state income taxes, sales taxes, or property taxes. If you add in all that stuff, things get even flatter. The chart below doesn't include imputed corporate incomes taxes or the employer portion of the payroll tax, so the overall numbers are lower than they should be, but it still gives a pretty good idea of the overall flatness of our tax system:

Article: The Washington Monthly
Source: The Washington Monthly

ARTICLES in addition to, and Amendment of the Constitution of the United States of America, proposed by Congress, and ratified by the Legislatures of the several States, pursuant to the fifth Article of the original Constitution.

Article: Bill of Rights Transcript...
Source: Bill of Rights Transcript...
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