Throughout the history of every society, there has always existed some form of an organized government. The goal of the government is to protect the individual freedoms and promote well-being of society as a whole. In order to carry out these tasks, the government needs revenues, which is successfully raised through taxes.
The development of the U.S. Federal Tax System spans from the colonial times to the tax cuts of the Bush Administration. The U.S. federal government relies primarily on income taxes, state governments depend mainly on income and sales taxes while county governments mostly use property taxes for their revenues (Fair Tax). Society has gained benefits and experienced negative results from several forms of taxation and as a consequence, an alternative form of taxation has been developed and heavily promoted.
A new, single tax rate called the Fair Tax will be solely based on taxing consumption [www.fairtax.org]. This new tax allows consumers to “decide when and if they pay taxes” (Ose). One of its most distinctive features is the prebate paid to all households under the poverty line. This prebate will cover tax expenses charged on items that meet basic needs. The Fair Tax eliminates “the income, payroll, corporate, gift, estate, capital gains, self-employment and alternative minimum taxes… increases take-home pay by at least 25.3%” (Ose). An extreme change in a tax system brings on many supporters and opponents alike who view the alteration as either progressive or regressive on economic growth and income distribution.
This paper will offer in depth analysis of the current federal tax system and the innovative Fair Tax policy from four different economic perspectives: Liberal, Radical, Austrian and Ecological. These perspectives will then propose the most efficient tax policy based on their merged economic values. The exploration of these diverse perspectives will present new insight into the current tax system and the possibility of a new structure.
Nguyen, Quynh T.
"The Most Efficient Tax Policy: The Federal Tax System vs. the Fair Tax Policy,"
Rollins Undergraduate Research Journal: Vol. 5
, Article 7.
Available at: https://scholarship.rollins.edu/rurj/vol5/iss1/7