Tax fairness is a concept that revolves around simplifying income tax laws and preventing the usage of loopholes and incentives through reforming current laws and procedures. Tax reform ideals vary between countries depending on the current income tax system each government has in place, but most revolve around the idea of replacing the current system with a flat rate income tax. In general, tax fairness reform centers on two main ideas: first, simplifying the current tax system will allow people to understand their taxation requirements in clear and straightforward terms, and second, the need to create fair tax ideals across all incomes and positions. Many tax fairness organizations believe that certain groups are taxed more heavily than others, and that often those with the greatest means will pay some of the smallest taxes.
Argument for Reform
In many cases, the desire for tax fairness reform comes from a frustration with the complexity and variation of the current income and property tax systems. Most of these systems are quite old, depending on the country, and most have decades of additions and reforms; as a result, the layers of outdated laws and terms within these systems are often difficult for the average person to understand. In the ideal fair tax situation, a tax reform would occur to bring clarity to the system and remove or update laws that no longer apply. Under a new tax system, those for the reform argue that the tax rate would be equal among all income classes creating equality and fairness among taxpayers.
Those for reform may be groups, politicians, or individuals, but all share the same hope of fair taxes for all citizens. Many supporters of fair tax reform have joined together to raise awareness through websites and blogs, by holding educational meetings, and by collecting money to help raise awareness of their views. Several politicians and potential candidates run for office on the premise that they will fight for a fair tax reform — in most countries these politicians have yet to make such changes.
One main reason why such a reform has not occurred in most countries is due to the unknown. Economists have done many studies on the effect of changing to a flat rate, tax fairness system, and the results are the cause of much debate. Many of the results predict a decline in economic, employment, and spending numbers for the first three to eight years after switching to a flat rate income tax. After switching tax systems, many people may choose not to spend as much money as they know it will be taxed, perhaps at a higher rate than before. Those who found employment as tax workers under the old system may not have a job under the new tax system, resulting in a higher unemployment rate.
Ideal Results of Reform
The first main point of tax fairness involves tearing down the current system and rewriting it without the layers of different laws. The perfect outcome would be a tax code that is written in a direct and clear manner — one that outlines the rights and responsibilities of every taxpayer. By reducing and eliminating laws that are outdated or beneficial only to the rich, the hope is that citizens will understand the new tax laws and have confidence that they are not being treated unfairly.
The second point of tax fairness involves creating a better way of taxing across all classes of society. In the current system, it is often easy for people with the greatest amount of money to reduce their taxes to a very small percentage of their earnings; on the other hand, as a taxpayer's amount of income decreases, the percentage of their salary that goes to taxes increases. This often creates a system where the poor and middle class shoulder the burden of taxation, and the wealthy do not. Tax fairness reform would result in all citizens paying the same percentage of their income towards taxes — an added benefit may come in the form of motivation, as more people may desire to seek better jobs for more pay while paying the same tax rate.
While much of the tax-reform ideals focus on income tax, some focus on property tax as well. The methods used for determining the value of a property should be normalized across the country in question, tax reform suggests. This will create a system where the overall value is based less on an assessor’s viewpoint and more on predetermined and manageable criteria. As a result, a home assessor will determine the value of a home based solely on specific criteria that applies to all homes in that country, as opposed to taking into consideration any upgrades or extras that a home may have.