Team 6 Manxes Team Case 1

Team 6 Manxes Team Case 1 - Fundamentals of Taxation Team 6...

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Fundamentals of Taxation Team 6 Case 1 Manxes Dr. Henderson Spring 2010 Part 1 (Supporting a Flat Tax rate structure on individuals) A flat tax rate structure is one in which each individual is taxed at the same rate regardless of the individuals amount of AGI. There are many potential benefits both for individuals and the U.S. government if the transition were to be made from the current progressive tax rate structure on individuals. Benefits resulting from the transition to the flat tax rate structure include such things as increased investment by higher income individuals. The tax savings that higher income individuals would reap from the transition from the current progressive tax rate structure would encourage investment in US companies as well as increased spending (due to more mobility with earnings) that in result would stimulate the US economy. The flat tax rate would also encourage many individuals to work harder/longer boosting their income and increasing production in the US economy that they otherwise would not have partaken in for fear of increase their tax bracket. This increase income (since not taxed incrementally) would allow individuals the opportunity to buy or invest in such things they otherwise wouldn’t have been. The increase in production would increase the US output boosting our GDP and potentially decreasing or national debt. The flat tax rate structure may encourage so lower income individuals to become employed or work harder in order to decrease their tax burden. All of these benefits are positive and help the US economy as a whole. Beneficial to the US government is the decreased complexity and increased transparency they would be gain from individuals reporting income. If
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Team 6 Manxes Team Case 1 - Fundamentals of Taxation Team 6...

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