Question

Should the IRS and the Department of the Treasury consider alternative tax systems, such as Flat Tax, National Sales Tax or “Fair Tax", or Value Added Tax as viable options for the US taxpayer, compared to the current Federal Tax System? What are the challenges and benefits of adopting and implementing each system?

Answer 1

The following are the challanges for adopting each system. 1 Poverty Reduction, Centrality of taxa Hon to Cecnomic development a) Well functioning system is necessary for the strong economic development b) Revenue System is central system for suppos Hng the relationship which is effective, accountable and Contribute to employment growth Outcomes. C9 There can alco be increasing interest in relationship between revenue and State formation & fragility. 2. Current Capability in Revenue Administrators a) Capabilities are direc Hy related to Revenue System with the Original approved budget along with the transperancy of tax payers assessment of tax and collection of tax payment. 3. Dealing with Capability, compliance and change in tax systems a) Tax reforms play differently Ace acooss different tax bases in these countries. b) Economic Impact of tax must be determined by the extent of tax changes. 4. Impact of Globalſs atlon a) Globalisation has changed the nature of economic Activity and increased Challanges faced by the revenul authorities

Benefits for adopting each System are a) I. Poogressive taxation a) Revenue system allows for Progressive taxation on the money oarned. 2, National Defense a) Each system will ensure that everyone in the COMMunity enjoys the benefits provided by the system. b) Payment of taxes will create a safe and Stable environment to the people. 3. Creation and maintainance of Infoastrectuse. a) A Well established Systems helps In the Creation and maintainance of Infrastructure which leads to the development of an @conomy