Facts: A new political party proposes to repeal the present federal income tax a
ID: 1162983 • Letter: F
Question
Facts: A new political party proposes to repeal the present federal income tax and estate and gift taxes, and replace them with a single federal tax on gasoline. They say that they have estimated the necessary rate for such a tax to be revenue-neutral by dividing current revenues from these income, estate, and gift taxes by current gasoline consumption in the U.S. They say that the rate would be around $20 per gallon in order to be revenue-neutral, but they propose, instead, a lower tax rate of S15 per gallon. They say the shortage would be made up by cuts in government spending. They assert the result would be fair, simple, remove the present double (triple, quadruple, quintuple?) taxation in our present system, encourage savings and investment, and cause unprecedented growth in jobs and in the economy. Most importantly, it would allow taxpayers to keep more of their own money and would be moral (whereas the present system is immoral). They emphasize that our present tax system picks winners and losers and that this tax would treat everyone the same. They further assert that this system would end the special tax favors and deals that are presently given by Congress to some taxpayers.Explanation / Answer
Issues of proposed tax structure:
All these weaknesses of indirect tax on gasoline should be compared with its benefits that are proposed by the political party. As enumerated, the benefits are: more simpler tax structure, lesser administrative costs on collecting tax, more fair and transparent and encourage higher savings and spending etc. Generally, the choice of which tax to choose depends on the economic structure and other socio-political factors.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.