A good explanation and introduction from my federal taxation of individuals
class were the words from Benjamin Franklin: “Nothing is certain except death
and taxes”. a The two inevitable things in life that we are not able to avoid. a Not
even leaving the country, talking about the taxes, because our tax law is based
on territory. a According to the IRS, “If you are a U.S. citizen or resident alien, the
rules for filing income, estate, and gift tax returns and paying estimated tax are
generally the same whether you are in the United States or abroad. You are
subject to tax on worldwide income from all sources and must report all taxable
income and pay taxes according to the Internal Revenue Code”. a Anyways, I
have learned a lot from this class about the other side of the coin, the federal
income tax of corporations and partnerships. a Also, this class taught me the
“pros and cons” choosing each entity. a While picking one from another, each
one was unique according to the business or personal goals. a
Now, the Fair Tax Act is planning to replace the mass income tax with a class
income tax and a federal value-added tax. a This plan is trying to find a balance
but even though it is targeting poverty, it is my opinion that there will always be
a sector trying to get the advantage of the system. a a After the pandemic, getting
the task force has been difficult for some companies because many people
realized that “teleworking” and passive income were ways to manage their own
lives instead of being ruled by a “schedule” or work for somebody else. a a As with
any other project, it has “ups and downs” or taking out and bringing new
concerns to the table. a When many people believe that our tax regulations are
favored by some and not others, poverty is not going to be eradicated by
facilitating monthly checks or providing advanced tax refunds. a It has to be
more educational and work on the problem with the resources we have on our
hands. a
VAT, or value added tax, would provide a benefit to the US in the form of
increased tax revenue. however, the management of the revenue would be an
ongoing concern. if the revenue was used for specific programs, such as the full
funding or expansion of programs for education (primary and college) or
funding healthcare or other social security programs, I could get behind that.
no one in this country should have to be concerned with their next meal, high
medical expenses, food, or a roof over their heads (regardless of their past
transgressions). however, I think for this to happen, laws would need to be
written to make it so the funds are used correctly and not for other interests.
However, there is a concern about those who are already struggling to provide
basic necessities and the implementation of a VAT. as a VAT is a tax universally
applied, it would be applicable to those who struggle. without raising taxes on
the wealthy, this could potentially create further wealth inequalities
(Investopiedia team, 2022). this could be viewed as a regressive tax so if it's
implemented in the US, a tax on those who are very wealthy should also be
implemented in tandem. The current tax system works well for the current
economy. However, with different economies or future economies, the current
tax system may not always be the best. I personally find value-added tax to be
helpful in some cases, such as raising children. I do not feel quite as comfortable
with the Fair Tax Act yet. The Fair Tax Act of 2015 is a “tax reform proposal that
imposes a national sales tax on the use or consumption in the United States of
taxable property or services in lieu of the current income and corporate income
tax…” (114th Congress, H.R.25 – FairTax Act of 2015). In my opinion, this may
discourage spending, and overall put more burden on lower income families’
lifestyle. Furthermore, discouraging spending may harm the overall economy.
This creates a vicious cycle of low spending, unstable economy, and deficit tax
revenues. However, I do think that there are certain amendments to the Fair
Tax Act of 2015 that may make it work better.
References
Congress. (n.d.). H.R.25 - 114th congress (2015-2016): FairTax Act of 2015.
Congress.gov. Retrieved April 4, 2023, from
https://www.congress.gov/bill/114th-congress/house-bill/25
Team, T. I. (2023, April 1). Value-added tax (VAT). Investopedia. Retrieved April
2, 2023, from https://www.investopedia.com/terms/v/valueaddedtax.asp
U.S. Citizens and Resident Aliens Abroad | Internal Revenue Service (irs.gov)
International Taxpayers | Internal Revenue Service (irs.gov)
Anderson, K., Hulse, D., Rupert, T. Pearson’s Federal Taxation 2023
Corporations, Partnerships, Estates, and Trust. Pearson 2023
Pratt, K. (2022). Learning to Live Without Form 1040. Tax Lawyer, 75(2), 411–
442.
