The tax implications along the way would also be helpful to know. I do think that the tax system
does need to be revamped although I do not know what that would look like in the long run for
businesses The course titled ‘Federal Income Tax of Corporations and Partnerships’ has been
extremely insightful and informative for me. By enrolling in the course, I have got the
opportunity to understand how tax rules and standards are applied in the context of diverse types
of entities such as partnerships, C Corporations, S Corporations, etc. The concepts that have been
covered in the course have helped me learn how different tax-related consequences may arise
while liquidating a business entity. Apart from focusing on the taxation aspects while liquidating
a business, it is essential to take into consideration the best practices and ethical approaches of
accounting so that an optimum economic solution can be arrived at by a business owner.
Currently, in the United States of America, income tax is charged on individuals as well as
businesses. There exists a diverse range of taxes, such as estate tax, excise tax, etc. which
increase the complexity of the current tax system. To streamline the existing taxation system in
the nation, the value-added tax can be introduced. The value-added tax model can be
appropriately adopted to promote the economic growth of the nation (Acosta-Ormaechea &
Morozumi, 2021). It is used as a useful tax instrument in several nations, such as Canada,
Bahrain, etc. VAT is considered to be a simple and efficient way of generating revenue for the
national government so that a healthy economic landscape can be established (Bansal & Alfardan,
2020). By introducing this new taxation model in the U.S.A, it will be possible to keep a proper
tab on diverse financial transactions and manage the money in an efficient way which can help to
optimally use funds that can facilitate national growth and development. The strategic use of
value-added tax can play an instrumental role in boosting the economic growth of a nation and
positively impact the quality of life of the citizens (Mjaku 2020).
As far as implementing the Fair Tax Act, I absolutely think that would benefit our economy
greatly. It would introduce a fair across the board tax. Some may argue that it caters to the
wealthy, but in my opinion it would not. It would allow workers to take home their full paycheck
instead of taxes taken out. Then it allows consumers to only be taxed on what they consume. So,
yes it would make everyday items to cost more, however in my opinion it would level the playing
field. The rich has to by goods just like the working class and middle class. This would allow the
rich to pay taxes instead of using all the tax loop holes they get to use as it is now. Social Security
and Medicare will have a more solid foundation with the Fair Tax Act as well. Also, in this Act
there is a progressive program called "prebate". Every legal resident would get a refund at
beginning of each month so all purchases up to Poverty Level are Tax free. This would also allow
benefits for legal residents no illegal residents that avoid income taxes in the system now, but
reap benefits. By implementing this program all cash only residents still pay their part. The IRS
would no longer be needed and would be done away with. I believe that would be the best thing
to ever happen. In my opinion the IRS is a waste of Tax Dollars and America would save so much
by not having them around and that would allow for that money to be spent elsewhere. That is my
take on the Fair Tax Act.
Reference
Acosta-Ormaechea, S., & Morozumi, A. (2021). The value-added tax and growth: Design matters.
International Tax and Public Finance, 28, 1211-1241.
Bansal, A., & Alfardan, A. A. (2020). Role of value added tax in the economic development of
Kingdom of Bahrain. Journal of Critical Reviews, 7(3), 17-24.
Mjaku, G. (2020) “Value added tax as an important factor of tax revenues in the Republic of
Kosovo,” International Journal of Scientific and Research Publications (IJSRP), 10(8), pp. 919–
921. Available at: https://doi.org/10.29322/ijsrp.10.08.2020.p104114. Fairtax.org (2023).
Retrieved from: https://fairtax.org/about/how-fairtax-works
