Comparing and Contrasting United States and International Tax Systems

Tax Systems

The most important source of a government's spending money is the taxes it collects from its people. There are a number of different systems a government can use to collect taxes. A few of the most common systems are national sales tax, flat tax and marginal tax. National sales tax is a system in which the tax is on goods people buy, and the revenue goes to the government. Flat tax is a proportionally equal income tax imposed on all citizens. A marginal tax system, which the United States uses, places taxpayers into brackets by income. The percentage of income taxed raises in each bracket.

The way a government taxes its people is often definitive of the way that government operates. Many people feel very strongly that one system or another is the ethical or fair way to collect taxes. Each system certainly presents fairness in at least some way. At the same time, every tax system has its unfair qualities. However, fairness is not the only factor to consider about when comparing tax systems. Additional factors include complexity and efficiency, as well as the incentive or ability to cheat the system.

Efficiency is an important factor to the government collecting the taxes because an efficient tax system results in maximization of tax revenue. National sales tax is an efficient system. Efficiency is this system comes from the people's incentive to work harder. By making more money, they are not necessarily increasing the amount of tax dollars they have to pay, but they are subject to Adam Smith's "invisible hand" of economics and increase productivity in the economy. The people benefit because the only way a person pays more taxes is by spending more on goods or services. Flat taxing is efficient as well. Similar to national sales...