You Decide

…that our current system helps to keep our overall individual tax rate lower compared with that paid in other developed countries?

Thanks, no doubt, to our tax code, Americans actually have a relatively low tax burden when compared with other developed countries. In the United States, the individual tax rate ranges from 0 percent to 35 percent.

How do other developed countries compare?

Here’s a quick snapshot of individual income tax rates in developed countries around the world.

• Australia: 17 percent to 47 percent
• Belgium: 25 percent to 50 percent
• France: 10 percent to 48 percent
• Japan: 5 percent to 40 percent
• United Kingdom: 0 percent to 40 percent
• Spain: 15 percent to 45 percent
• Taiwan: 6 percent to 40 percent

Reform our federal income tax code and likely watch your tax rate go up.

…there are so many other ways to levy taxes that are fair and don’t affect people’s incomes and would actually be better for the economy…

From 1791 to 1802, the U.S. government was supported by taxes on particular goods: distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. Taxes on luxury items like jewelry and on property paid for the War of 1812. Then, in 1817, the government shifted tactics to generate income and relied instead on import tariffs. There was a brief blip during the Civil War when income taxes were levied, but the income tax law expired in 1870, and Congress returned to the model of taxing domestic products like tobacco and distilled spirits to pay for the government. So with the exception of the Civil War, up until the 16th Amendment was passed, the government operated just fine without ever touching workers' paychecks.

These days, proposals for a flat tax, a national sales taxes, and value-added taxes (VAT) are bandied about as alternatives to federal income tax. Many Eastern European countries operate with a flat tax system, including Russia, which adopted a 13 percent flat tax under Putin’s leadership. Analysts of that shift in the tax strategy noted that when the system became simpler, more people complied, the tax income stream was more predictable and the predictability spurred economic growth. American advocates of a flat tax cite simplicity, economic efficiency, increased tax revenues and the downsizing of the IRS as potential benefits of a flat tax.

Then there’s the idea of a national sales tax, a model in which tax would be levied on the final purchase of all goods and services at the retail level (the current legislation before Congress for the Fair Tax has a rate of 23 percent of the total amount paid, including the tax payment). Many variations on the national sales tax model include rebates for low-income households that would effectively exempt all consumption up to the poverty level.

Finally, there’s the idea of the European-style VAT, a consumption tax that is levied based on the value added to goods and services at each stage of production and distribution. The VAT is tried and true: Virtually all developed countries have a VAT. It’s fair, it’s not disruptive and it makes a lot of money — no small consideration in an era of a $9 trillion deficit.

Whatever the strategy, dumping the IRS and the current federal tax code, some argue, would stimulate economic growth and make many Americans’ financial futures more secure.