Every day, our government is spending billions of dollars to support and defend American citizens. Programs in education, social security, welfare, environmental regulation, national defense and many other realms of our society require massive budgets to function and grow. So to fund all the interests of the country, many different types of taxes are imposed on people and businesses. But due to recent economic downturns, some doubt the tax code and want reform. While there may be some benefits to a change, altering our tax system would end up creating many more problems than it would fix, hurting the nation’s economy and its growth.
The country’s basic tax policy is comprised of income taxes, corporate taxes, payroll taxes, transfer taxes, and excise taxes. Income tax is the percentage citizens must pay out of their yearly income. This is where the majority of the government’s budget comes from. Corporate and payroll taxes deal with taxing on businesses, and transfer taxes take a percentage from assets being passed from one person to another. An example of this could be the inheritance of property. And finally, there are excise taxes which are a tax on goods or services (Nguyen). Together, these taxes fund the majority of our government’s budget and the upkeep of our nation.
The tax code began in 1912 when the 16th amendment to the constitution was adopted. This enabled the federal government to levy taxes directly on income. Soon, economists worked to better this by adopting a graduate income tax, otherwise known as a progressive tax. In this system, the government charges a higher percentage for those individuals or businesses that earn more income. To decide who pays what, congress devised the marginal tax brackets. The goal of this was to fairly decide who pays the different tax rates. First, they divided the country into four different household types, or categories to file taxes under. This includes single, married or joint filing, married but filing...