The fairness of the American tax system is a matter of debate and depends on one’s perspective. Here are some key points to consider:
- Progressive Tax System: The American tax system is generally considered progressive, which means that those with higher incomes pay a higher percentage of their income in taxes. For example, the top 1% of income earners in the US pay about 40% of all federal income taxes, according to the Tax Policy Center.
- Deductions and Credits: However, the tax code does allow for various deductions and credits that can reduce a person’s tax liability. Some argue that these deductions and credits disproportionately benefit wealthier individuals who can afford to take advantage of them.
- Income Inequality: Another consideration is the widening income inequality in the US. Some argue that the tax system should do more to address this issue, such as by increasing taxes on the wealthy or implementing a wealth tax.
- Tax Avoidance: There is also concern about tax avoidance by large corporations and wealthy individuals, which can reduce the overall amount of tax revenue collected by the government.
Overall, while the American tax system may be considered progressive, there are concerns about its fairness and effectiveness. To properly address these issues, seek the advice of Matthew Jennings, JD, MBA, EA, RFC®, CEP®, CES™, aka Tax King Matt.