Taxes Essay

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Taxes a Realistic Approach By: Brandon Owens Professor Higgins Accounting 307 8/23/2014 Taxes a Realistic Approach In the United State of America (U.S.) taxes provide the infrastructure and back the U.S. economy. Taxes provide the government with revenue to support its daily operations. The freedoms we enjoy as citizens of this country are provided by taxes. Currently taxes follow a progressive system: as your income increases so does your tax rate as described in Hoffman (2013) “a tax is progressive if a higher rate of tax applies as the tax base increases” (p. 1-6). There are many opponents to the current tax structure. One of the antagonist theories is that of a flat tax rate. The flat tax structure calls for a standard tax rate across the board. The proposed rates have ranged from seventeen to twenty percent. Proponents of this structure are leaning toward the lower figure of seventeen percent as stated in Hoffman (2013) “ One proposal is for a flat tax that would replace the current graduated income tax with a single tax rate of seventeen percent” (p. 1-20). Various versions of the flat tax structure have been introduced ranging from deductions being completely disallowed to selected deductions being allowed. In its purist form you have a standard rate anywhere from seventeen to twenty percent, large personal exemptions, disallowance of any deductions and the removal of taxes on investments (capital gains). In order to give an educated opinion we have to look at the numbers associated with each plan and the current state of the economy. The U.S. Gross Domestic Product (GDP) is roughly sixteen point eight trillion according to World Bank (2014). GDP according to World Bank (2014) is defined as “the sum of gross value added by all resident producers in the economy plus any product taxes minus any subsides not included in the value of the product”. A

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