This course was intimidating from the start, which made me read as much as I could get my mind
wrapped around the different learning objectives. Has all the ready made me an expert, not; maybe
scratched the surface. c Now at the end of the term, I am still intimidated by tax preparation but
found some understanding regarding the decisions to be made when choosing which designation is
a good fit for different situations. c This course has also confirmed, for me, that taxation is an
overwhelmingly complicated process. c It will continue to use my tax preparer for my filing.
Congress should always be considering an alternative approach to taxation because in the event the
scheduled outcome is not what was expected there is something in the wing to push forward.
Having said that, “a value-added tax (VAT) taxes goods and services at every stage of production and
sale, the net economic burden is like that of a retail sales tax (Sammartino, 2020).” c If the online
articles are correct and the applied VAT would be instead of income taxes, there would be some
very good benefits. c But do these benefits out way the struggles brought on the low-income
families. c I could be viewed as another ploy, by the Federal Government, to make the rich richer and
poor poorer.
Enacting a value-added tax or the Fair Tax Act can provide economic benefits, but at what cost. c
“Because lower-income households spend a greater share of their income on consumption than
higher-income households do, the burden of a VAT is regressive when measured as a share of
current income. The burden, as a share of income, is highest for low-income households and falls as
household income rises (Sammartino, 2020).” c
Since I work with the US tax system, I do not believe Congress should change the tax system, at least
not for Individual taxpayers. I think the corporate tax system should be overhauled to ensure bigger
companies like Amazon, Walmart, Nike pay more in federal income taxes. They get a lot tax breaks
that help avoid "double taxation."
I do not agree with the Value Added tax system it seems as if the only people that would end up
taking the burden is the consumers. As raw materials move down the supply chain I feel as the if tax
will be passed down to the buyer of the product, good, or service the price will increase as the tax is
passed along down the supply chain. This will result in higher prices for the same good and
services. Inflation is already higher than it has ever been, the added value tax will only harm
consumers.
The Fair Tax act is certainly radical as it sounds, after 2027 the bill calls to abolish the IRS, income,
and payroll taxes all together. There would be one tax based the consumption or use of goods and
services. Which sounds reasonable, I guess. The state would be responsible for collecting the taxes
and submitting payments to the Treasury, but how would one keep track of who pays what? What
about people who barter and trade for goods and services? How would they be taxed. This Fair Tax
Bill opens the door to so many questions.
Congress will have to find answers to these and a lot more as the we live in country is always
changing the way we do business. Currently with inflation everything is increasing including sales
taxes because sales taxes are proportionate to the subtotal of the receipt. So as prices increase taxes
will increase as well. What would be better for taxpayers is that we will receive our gross pay, and I
would appreciate that money back in pocket.
References c
FairTax Act of 2023 (n.d.). bill.
Orem, T. (2023, February 3). Value-Added Tax (VAT): What It Is & Who Pays. Retrieved April 4, 2023,
from https://www.nerdwallet.com/article/taxes/vat-value-added-tax
Kurtz Leben, Danielle (January 2013) Commentary: Why the U.S. Should Adopt a Value-Added Tax.
Retrieved from: www.usnews.com
H.R. 25 (2023-2024) Fair Tax Act of 2023; 118th Congress. c Retrieved from:
https://www.congress.gov/bill/118th-congress/house-
bill/25?q=%7B%22search%22%3A%5B%22%5C%22H.R.+25%5C%22%22%5D%7D&s=4&r=1
Sammartino, Frank (May 2020) The Tax Policy Centre Briefing Book: How Could We Improve Our
Federal Tax system? Retrieved from: www.taxpolicycenter.org
