Question

Do you believe the gradual system of federal rates is fair? Would a flat tax be more fair and efficient? Why or why not?

Answer 1

The gradual system of federal rates (for individuals with different filing status) would be fair for the following reasons:

*The tax rates start from 10% and have higher rates of 15% etc upto 39.6%. This ensures that individuals earning higher income pay higher taxes, which is fair and equitable.

*Not all income is charged at a particular rate. The rates are different for different slabs of income starting from $0. Higher rates are applicable for higher slabs.

*An individual's income is put into these different slabs and the applicable rate is charged for each slab. This means that the income of an individual is taxed at different rates, with higher rate for additional dollars beyond every slab.

In contrast the flat tax rate system will have a single rate of tax which would be applicable to the entire income. Hence, all persons would be paying taxes at the same rate irrespective of their income. This would be unfair to the lower income groups who would be struggling to meet their basic needs.