The Implications of a Flat Tax in the United States

As the elections near, there is one thing that most Americans want to hear about. That issue is taxes, and how to best distribute tax revenues taken from the people and then used to pay for services and the needs of all Americans. Most feel that money they earn should be kept in the pocket of the American worker. However, there can be no functioning society without the tax revenue provided to a government.

Most people pay taxes based on how much income they make. The more money you make, the more money you are asked to pay in taxes. While it might seem unfair that someone making 500,000 dollars has to pay almost 40 percent of their income, it still leaves that individual with more money after taxes as opposed to someone who makes 20,000 dollars and pays ten percent in taxes.

What about a flat national sales tax? Several Republicans were in favor of abolishing the IRS altogether and instituting a national flat tax of roughly 25 percent on all taxable goods and services in the United States. In exchange for a flat tax, the IRS and other institutions would be eliminated and there would be no need to sweat tax day.

What are the pros of a flat tax? A flat tax would impose a tax only on goods and services you use. If you buy a car, you pay more in tax as opposed to buying a gallon of milk at the grocery store. This allows for a progressive tax to still be in place because the wealthy would pay more tax on the expensive items that they buy, while not targeting any one group with tax hikes or tax decreases.

Are there any cons to this? A 25 percent tax on all items would potentially harm businesses because there might be a perception that goods cost more. A gallon of milk that cost two dollars yesterday would now cost $2.50 at the grocery store. While we all pay sales taxes anyway, it might create the impression that prices are up and might cause people to spend less.

A flat tax could take the politics out of taxes in some pretty big ways. There would be no need for anyone to feel like they are being taxed unfairly, or possibly feel that hard working Americans are paying for the welfare of those who are not employed. A flat tax would potentially create a system of less government involvement and a sense that at least these taxes are only being levied on things you actually wanted to use.