Pros and Cons of the Fair Tax Act If you've experienced filing and paying taxes taxes, you know how confusing and how much of a hassle it can be. Many people don't only complain about the complex process, they also express that wealthy persons and families, businesses, and special interest groups pay less tax than they're supposed to due to certain exemptions and loopholes. Because of these frustrations, the Fair Tax Act is gaining a strong following. This plan aims to replace the federal tax income system with a flat national sales tax. Supporters of the plan believe this would help to evenly spread the tax burden, get rid of loopholes, and take away the hassle of collecting taxes without affecting federal tax revenues.
Going to school can vary in price, whether they pay instate tuition or go to a private college, the average cost ranges about "$65,000." Harnett is arguing to allow college athletes to get paid while also getting their college paid for. So, consider a student-athlete getting paid $100,000 a year, "A student-athlete paid a salary," of $100,000 a year "would owe $23,800 in federal income tax and $6,700 in state taxes," which comes to "a total of $30,500." In some cases, "cities that levy an employee payroll tax, the salaried student's taxes go up about $2,400 per year. Income taxes then are $32,900.
In the United States, we favor progressive income tax. It is a taxing mechanism in which the taxing authority charges more taxes as the income of the taxpayer increases. A lower tax is collected from taxpayers earning less. The higher class is affected more by this taxation, because they are taxed higher than the middle and lower class. Many people argue that this taxation is not fair, because the higher class, just like the middle and low class, work for their money, and should not be punished for their wealth by paying higher.
To try to fix the imbalances previously discussed, two main changes have been suggested: take more in and send less out. Currently Social Security is financed by a 12.4% tax on wages and salary, up to $118,500. The ‘take more in’ approach would be executed by raising the tax by 2.9% or removing the cap to close the funding gap. The ‘send out less’ approach is the less accepted approach, because it is seen as more beneficial to those with higher incomes. The main focus of this approach is getting people to retire later, but people with higher incomes enjoy higher life expectancies.
As a result of the lease, the company will be assessed an annual VAT amount of $ 93K on the annual lease payment. Additionally, St. John Mexico’s minimal taxable income will be increased by 44K due to the increase in the operating expense as a result of the inclusion of the rent expense. Consequently, St. John Mexico will incur an additional income tax liability of $13K. 3. Generally, Mexico imposes a 10% withholding tax on dividends paid to foreign parents.
Supporters of this idea believe that it is a better system than the progressive tax system currently in place, where taxpayers are taxed according to their income bracket. But how is it more beneficial? And won 't it carry any negative effects on the economy and government revenue? Go through the advantages and disadvantages of a flat tax rate to gather supporting data before you decide on your stand. List of The Pros of a Flat Tax 1.
One main issue with regard to a regressive tax system is that it limits the chance of people in the lower income group to purchase expensive and exquisite goods as they are priced and taxed in a very high rate. Besides, when a regressive tax is based on consumption such as a sales tax, it can introduce an element of freedom of choice. Only those who choose to use a particular product or service must pay the tax, and those who consume more frequently pay more taxes than occasional users. People also have some measure of control of how much they pay in taxes. If they wish to lower what they pay in taxes, they can elect to cut back on or discontinue the use of an item.
This corrupting process works to the advantage of the rich and powerful. Under a flat tax, needless to say, such shenanigans would disappear. Opposition to a flat tax, at least in the US, comes from two major sources. The most significant opposition is from interest groups that have placed loopholes in the tax code. Ideologues on the left are the other major group opposing tax reform.
These two elements include Social Security and Medicare taxes which are imposed on both employees and employers. Additionally, payroll taxes are imposed by both federal and state governments. The Social Security tax pays for the retirement, disability, and survivorship benefits received by numerous Americans every year. As of 2017, the Social Security tax rate is 12.4%. Half of the tax is paid by the employer, and the other half of the tax is paid by the employee.
INTRODUCTION Economic growth is defined as the increased capacity of an economy to be able to produce goods and services in comparison from one period of time to another. This is figured by the genuine Gross Domestic Product (GDP) and development, and is measured by utilizing genuine terms such as “Balanced Inflation”. These terms help to remove any distorted views on the perceived outcome of inflation on the cost of merchandises produced. Likewise, Economic growth is related to the high expectations in a person’s standard of living. If the standards are high, it wouldn’t be beneficial for the economy as the working class individuals will face a lot of trouble.