Tax reform
Encyclopedia
Tax reform is the process of changing the way taxes are collected or managed by the government
.
Tax reformers have different goals. Some seek to reduce the level of taxation of all people by the government. Some seek to make the tax system more progressive
or less progressive
. Some seek to simplify the tax system. Some try to make the tax system more understandable, or more accountable. Many organizations have been set up to reform tax systems worldwide, often with the intent to reform income taxes or value added taxes
into something considered more economically liberal. Others propose tax systems that attempt to deal with externalities
. Georgism
claims that various forms of land tax can both deal with externalities and improve productivity.
to reform the collection and management of taxes.
During the late 19th century American economist, Henry George
, started a global movement for tax reform whose aim was the abolition of all forms of taxation other than the Single Tax on land value. The effects of the movement on taxation policy, although diminished can still be seen in many parts of the world including Australia, New Zealand, Hong Kong, Taiwan and Singapore. Efforts to promote this form of tax reform in the United States continue under the aegis of organizations such as The Henry George Foundation of America.
During the Bush
administration, the President's Advisory Panel for Federal Tax Reform
recommended the removal of the Alternative Minimum Tax
. Several organizations are working for tax reform in the United States
including Americans for Tax Reform
, Americans For Fair Taxation
and KillYourTaxes.com. Various proposals have been put forth for tax simplification in the United States, including the FairTax
and various flat tax
plans and bipartisan tax reform proposals.
In 2010, Fareed Zakaria
proposed what he described as a "grand bargain" with tax reform for economic adversaries Paul Krugman
and Niall Ferguson
; an attempt to bridge their political divide with the creation of a simple and indirect Federal Sales Tax
. Representative Chaka Fattah
of Pennsylvania introduced a bill, H.R. 4646, called the Debt Free America Act that would introduce a 1% financial transaction tax
and eliminate federal income tax. He has introduced bills calling for similar tax reform since 2004, but the bills have never made it out of committee.
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
.
Tax reformers have different goals. Some seek to reduce the level of taxation of all people by the government. Some seek to make the tax system more progressive
Progressive tax
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...
or less progressive
Progressive tax
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...
. Some seek to simplify the tax system. Some try to make the tax system more understandable, or more accountable. Many organizations have been set up to reform tax systems worldwide, often with the intent to reform income taxes or value added taxes
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
into something considered more economically liberal. Others propose tax systems that attempt to deal with externalities
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
. Georgism
Georgism
Georgism is an economic philosophy and ideology that holds that people own what they create, but that things found in nature, most importantly land, belong equally to all...
claims that various forms of land tax can both deal with externalities and improve productivity.
United States
There have been many movements in the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
to reform the collection and management of taxes.
During the late 19th century American economist, Henry George
Henry George
Henry George was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land...
, started a global movement for tax reform whose aim was the abolition of all forms of taxation other than the Single Tax on land value. The effects of the movement on taxation policy, although diminished can still be seen in many parts of the world including Australia, New Zealand, Hong Kong, Taiwan and Singapore. Efforts to promote this form of tax reform in the United States continue under the aegis of organizations such as The Henry George Foundation of America.
During the Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
administration, the President's Advisory Panel for Federal Tax Reform
President's Advisory Panel for Federal Tax Reform
On January 7, 2005, President George W. Bush announced the establishment of the President's Advisory Panel for Tax Reform, a bipartisan panel to advise on options to reform the United States income tax code to make it simpler, fairer, and more pro-growth to benefit all Americans.On November 1,...
recommended the removal of the Alternative Minimum Tax
Alternative Minimum Tax
The Alternative Minimum Tax is an income tax imposed by the United States federal government on individuals, corporations, estates, and trusts. AMT is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold . This exemption is substantially higher than the...
. Several organizations are working for tax reform in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
including Americans for Tax Reform
Americans for Tax Reform
Americans for Tax Reform is an advocacy group and taxpayer group whose stated goal is "a system in which taxes are simpler, flatter, more visible, and lower than they are today. The government's power to control one's life derives from its power to tax...
, Americans For Fair Taxation
Americans For Fair Taxation
Americans For Fair Taxation , also known as FairTax.org, states it is the United States' largest, single-issue grassroots organization and taxpayers union dedicated to fundamental tax code replacement...
and KillYourTaxes.com. Various proposals have been put forth for tax simplification in the United States, including the FairTax
FairTax
The FairTax is a tax reform proposal for the federal government of the United States that would replace all federal taxes on personal and corporate income with a single broad national consumption tax on retail sales. The Fair Tax Act would apply a tax once at the point of purchase on all new goods...
and various flat tax
Flat tax
A flat tax is a tax system with a constant marginal tax rate. Typically the term flat tax is applied in the context of an individual or corporate income that will be taxed at one marginal rate...
plans and bipartisan tax reform proposals.
In 2010, Fareed Zakaria
Fareed Zakaria
Fareed Rafiq Zakaria is an Indian-American journalist and author. From 2000 to 2010, he was a columnist for Newsweek and editor of Newsweek International. In 2010 he became Editor-At-Large of Time magazine...
proposed what he described as a "grand bargain" with tax reform for economic adversaries Paul Krugman
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...
and Niall Ferguson
Niall Ferguson
Niall Campbell Douglas Ferguson is a British historian. His specialty is financial and economic history, particularly hyperinflation and the bond markets, as well as the history of colonialism.....
; an attempt to bridge their political divide with the creation of a simple and indirect Federal Sales Tax
Sales taxes in the United States
There is no federal sales or use tax in the United States. 45 states and the District of Columbia impose sales and use taxes on the retail sale, lease and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose additional local...
. Representative Chaka Fattah
Chaka Fattah
Chaka Fattah is the U.S. representative for , serving since 1995. He is a member of the Democratic Party...
of Pennsylvania introduced a bill, H.R. 4646, called the Debt Free America Act that would introduce a 1% financial transaction tax
Financial transaction tax
A financial transaction tax is a tax placed on a specific type of financial transaction for a specific purpose.This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers. However, it is not a taxing of the financial institutions themselves...
and eliminate federal income tax. He has introduced bills calling for similar tax reform since 2004, but the bills have never made it out of committee.
See also
- Americans For Fair TaxationAmericans For Fair TaxationAmericans For Fair Taxation , also known as FairTax.org, states it is the United States' largest, single-issue grassroots organization and taxpayers union dedicated to fundamental tax code replacement...
- Americans for Tax ReformAmericans for Tax ReformAmericans for Tax Reform is an advocacy group and taxpayer group whose stated goal is "a system in which taxes are simpler, flatter, more visible, and lower than they are today. The government's power to control one's life derives from its power to tax...
- Land Value TaxLand value taxA land value tax is a levy on the unimproved value of land. It is an ad valorem tax on land that disregards the value of buildings, personal property and other improvements...
- FairTaxFairTaxThe FairTax is a tax reform proposal for the federal government of the United States that would replace all federal taxes on personal and corporate income with a single broad national consumption tax on retail sales. The Fair Tax Act would apply a tax once at the point of purchase on all new goods...
- Flat taxFlat taxA flat tax is a tax system with a constant marginal tax rate. Typically the term flat tax is applied in the context of an individual or corporate income that will be taxed at one marginal rate...
- FreedomworksFreedomWorksFreedomWorks is a conservative non-profit organization based in Washington D.C., United States. FreedomWorks trains volunteers, assists in campaigns, and encourages them to mobilize, interacting with both fellow citizens and their political representatives....
External links
- Americans for Responsible Taxes
- Americans For Fair Taxation
- Americans for Tax Reform
- The Chartered Institute of Taxation - U.K.
- Citizens for an Alternative Tax System
- Citizens for Tax Justice
- Henry George Foundation of America
- Kill Your Taxes
- Libertarian Party - U.S.
- Low Incomes Tax Reform Group - U.K.
- National Taxpayers Union
- Tax Foundation
- Tax Reform Australia - Australia