Friday, October 28, 2011

Conclusive Long-Term Effects of Income Tax in the United States

Income tax makes up a large portion of tax revenue. However, it is a relatively new concept in terms of American history. There was no income tax law in the United States until 1862, where congress passed the first income tax law in order to help fund civil war efforts. The concept of income tax was only introduced in a time of war. However, income tax went in and out of effect through the years until 1913 when it became a permanent fixture in the United States Constitution; despite the fact that less than twenty years earlier the U.S. Supreme Court ruled income tax unconstitutional.  Up to that point, the national government relied on various sales taxes and the economy flourished under those circumstances.
The simple economics show us that in a hypothetical society where there is 100% income tax and everything is provided: people are less likely to work hard, create, invent, and innovate.  The lack of any one of these things could lead to a stunted economy.  On the other hand, consider a society where there is no income tax.  The more money that an average household has, the more goods they buy.  More goods production equals more job growth.  This is a constant cycle.  A true consumer based market allows room for innovation and change.  In the first society, the lack of a consumer based market, leaves no room for change.  The idea of this is how it has always been prevails.
With that in mind, with our high national unemployment rate, national debt situation, and failing economy; doesn't a national sales tax make more sense than income tax?  Coupled with stricter social assistance policies; a national sales tax would force our economy to bloom.  It would force the employable that are on social programs to get a job to produce goods to stimulate the economy. We could truly change the way things are.
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