1

The Current American Tax Structure Hinders Economic Growth

Student's Name

University

Course

Professor

Date
 2

The Current American Tax Structure Hinders Economic Growth

Introduction

The existing American tax structure is complicated and a hindrance to the development

of small and medium businesses that are vital to economic growth. This structure is founded on a

progressive tax system that tax the wealthy more than the low-income earners. Most scholars

argue that the current tax system is unfair, and biased and can hinder innovation and the

motivation to work.

Analysis of the Issue

The American taxes are charged on a person’s taxable income. A person’s gross income

comprises receipts and gains from all economic operations that entail remuneration from

employment, revenues from businesses, interests, and profits from property sold and rent. In a

progressive tax system, the wealthy or people with large revenues pay higher taxes while

individuals with low incomes pay lower taxes depending on their brackets. Extreme tax rates on

entrepreneurs or investors and diverse tax misrepresentations hinder organizational performance

processes and derail the progress in salaries and career development of the entire economy.

(Popescu et. al., 2019). High corporate taxes also hinder the competitiveness of business on the

international stage. This creates a rate disparity at diverse income levels and makes the

computation process complicated and unfair.

Alternative points of View

A flat tax structure is a solution to the complicated progressive tax system. This system is

simple. Its simplicity inspires investment operations among small businesses that are unable to

operate under the existing system. Besides, a flat tax structure encourages a robust economy by

improving investment operations, therefore, resulting in increased employment opportunities.

 3

For example, the structure inspires savings and this ensures massive monetary security in the

economy.

Your Point of View

Although a flat-rate tax structure is beneficial, this system has diverse limitations.

Therefore, the American government should implement a tax system that facilitates the

capability of the government to realize its economic objectives such as economic growth and

employment creation (Popescu et. al., 2019). The system ought to offer partial treatment to all

taxpayers and organizations. Besides, the proposed structure should comprise a tax system that

focuses on the people’s consumption levels.

Conclusion

Governments should implement tax systems that favor taxpayers and ensure equal

distribution of wealth and income among individuals and organizations.

 4

References

Popescu, M. et. al., (2019). Flat-Rate versus Progressive Taxation? An Impact Evaluation Study

for the Case of Romania. Sustainability, 11(6405): 1-16.