Should the USA convert to a zero personal income tax?
This paper will discuss 2 countries that have implemented zero federal income tax and what would happen if the US chose to adopt a similar tax base.
Every year most people in the United States of America gear up to file their yearly personal income taxes. The government relies on this money to operate. About forty five percent of the government income of the United States comes from personal income tax. A lot of Americans wish that they did not have to pay personal income taxes and that the US would adopt a zero income tax policy. There are many countries that currently have a zero tax model and it works. This ...view middle of the document...
Even with that there are still many advantages to the U.S. not having federal income taxes.
The first advantage is more money to circulate. If there are no personal taxes that would mean that there would be more money for consumers to buy more products and services. When consumers purchase more that creates a need for more jobs. When there are more jobs the economy is strengthened because there is more money for goods and services. People could travel more within the United States. There are endless opportunities for consumers to spend money.
Another great advantage is that if there were no more personal taxes people could invest more into their retirement. People living on social security alone is just not enough today. There is so many people living in poverty because social security does not provide them with enough benefits. If there was no more personal income taxes that could motivate people to put aside a lot more for their retirements. If they had the opportunity to put more aside for their retirements that would help eliminate the need for a lot of free government assistance. If there is no more need for a lot of the government assistant programs then that money could be used to help fund the other projects of the government.
Although there are tax breaks for people who start their own businesses. Removing the personal tax requirements might encourage other people to step out on their own and create their own businesses. The extra money people would save while working other corporations by paying no personal tax could be invested into something new. Small businesses help drive the economy forward. A lot of times people want to start small businesses, but lack the capital to do so. Allowing no personal tax gives them that extra capital that would be needed for business development.
While there are a lot of advantages to not having personal income taxes there are several disadvantages as well. One disadvantage would be the budget cuts that would have to happen within the government. If the government did not charge a federal income tax then where would the money come from to operate the government? The government would more than likely not be able to offer as many programs that help many citizens of the United States. Many people depend on the government for assistance. The government operations could possibly be scaled back due to no personal income taxes.
Another disadvantage would more than likely be a higher tax on other services. While not paying a tax on personal income is great, the government would still like to makeup some of that money from somewhere. That would more than likely mean higher taxes on the corporate level, or excise taxes, and other fees. The corporations would pass that higher tax down to the purchaser of those goods and services. The person would more than likely not be saving much money if that were to happen. People who are low income would also hurt worse with this. In the personal...