Small Business Reading Room

Thursday, September 22, 2005

The 21st Century Tax Debate for Dummies

Income or consumption?
Flat rate or progressive?
AMT or not to AMT?

So you're not an expert. You're not alone.
But you still know enough to recognize that our tax policy helps to shape our society and the economy.

Exactly what are the issues are and how do they affect you?

The U.S. General Accountability Office has published a special report on this very subject that is aimed at everyday people.

What can you expect? Here's a section from the report's abstract:

Taxes are necessary because they fund the services provided by government. In 2005, Americans will pay about $2.1 trillion in combined federal taxes, including income, payroll, and excise taxes, or about 16.8 percent of gross domestic product. Beyond funding government, the federal tax system has profound effects on the economy as a whole and on individual taxpayers, both for today and tomorrow. Taxes change people's behavior and influence the economy by altering incentives to work, consume, save, and invest. This, in turn, affects economic growth and future income--and thus future government revenues. At the same time, the current tax system generates fierce controversy over fairness--who should pay and how much they should pay. In addition, the current tax system is widely viewed as overly complex, thereby reducing the ability of individuals to understand and comply with the tax laws. Furthermore, the tax system is costly to administer with most of the costs of administration, such as record keeping, understanding the laws, and preparing returns, borne by taxpayers. Concerns about the economic effectiveness, fairness, and growing complexity of the current tax system raise questions about its credibility. These concerns have led to a growing debate about the fundamental design of the federal tax system

Read the report:

No matter what side of this debate you are on, know the issues, and stand up for what you believe.
No one else will do it for you.


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