When compared to the Bush tax cuts, it appears that the latter does not pose a sound tax system. Although at the moment, the U.S. government may boast of budget surplus, later on, if fiscal policies today are continued in the future, this system will result to huge escalating deficits which might be unsustainable because when the baby boom generation retires a few decades from now, government's expenditure on retirement and health benefits such as Social Security, Medicare and Medicaid will increase significantly, to the prejudice of the country's future. A growing imbalance will exist between the revenue raised and the expenditures (GAO 2005).
The present tax code can also be said to be burdensome on the part of the taxpayers, on the aspect of compliance. The complex procedure involved in the accounting appears to be far more serious that it should be. Hence, the government, through its defective tax system, hinders the growth of its economy and its constituents .
From a critical view of an ordinary income earner, there seems to be a big inclination to favor the big income earners as opposed to the lowly income earners. Thus, theoretical justice is not achieved. ...
Hence, a progressive overhaul of the tax system is needed in order to address these obviously significant problems evolving the United States.
Deficit - the result of the government taking in less money than it spends
Inflation - the simultaneous increase of consumer prices and decrease in the value of money and credit
Tax Code - the official body of tax laws and regulations
Tax Credit - a dollar-for-dollar reduction in the tax; can be deducted directly from taxes owed
Tax Cut - a reduction in the amount of taxes taken by the government
Tax Deduction - a part of a person's or business expenses that reduces income subject to tax
Tax Exemption - a part of a person's income on which no tax is imposed
Tax Gap - the difference between taxes that are supposed to be paid and taxes that are voluntarily paid
The prevailing tax system in the United States has several deficiencies that need to be addressed as soon as possible, if only to avoid a total collapse of the economy in the near future. Among these are the following: One, there are various acts of double taxation. For example, savings are being taxed although it was obviously taxed in the past when earned by the taxpayer. This provision thereby discourages the constituents from saving for their future, for fear that the interest on savings which could be added to the original savings would be taxed anew. Corporate income is also being taxed twice.
Two, tax code hinders capital formation rather than encourage it. Instead of providing incentives to capitalists or investors in order to encourage investment within the territory, the U.S. government prefers borrowing over equity. Thus, United States earn the title of the world's leading borrower. Add this to the fact