Business

Should America abolish income tax?

WRITTEN BY
01/06/25
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Fact Box

  • In 1862, President Abraham Lincoln created the role of commissioner of Internal Revenue that initiated an income tax to pay for Civil War expenses
  • The first 1040 form appeared in 1913 after the ratification of the 16th Amendment, which allowed Congress to collect a tax on incomes separate from the states.
  • Depending on income rates, federal income taxes range from 10% to 37% which are categorized into tax brackets. 
  • As of February 2023, the Tax Foundation reports the states that currently collect no state-level income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
  • An April 2022 CBS/YouGov poll revealed that 55% of conservative and only 37% of liberal respondents reported “they pay more than fair share in taxes.”

Andrew (No)

Income tax is one of the fairest methods for generating government revenue because it is easy to make it progressive. In a progressive tax system like America's, those earning more (who can afford to pay more) pay more in taxes, while others earning less pay a smaller percentage. When structured this way, income tax fundamentally differs from other forms of tax structures, such as sales tax, which are regressive and unfair because individuals with less money pay the same amount as those to whom the tax makes no difference. In other words, if the United States were to abolish income tax and rely entirely on other forms of tax for revenue, the poorest Americans would be footing a more significant share of the bill relative to their income.

Without income tax, we risk underfunding the federal government, drastically impacting the services that millions depend on. Even worse, without an income tax, we might be totally reliant on the wealthy for much of the infrastructure in our communities, which would likely increase disparities between different areas. The United States brings in more gross revenue through income tax than any other nation, a fact that is clearly connected with the enormity of our economy and our influence in the world.

Finally, income tax gives people a stake in society and a reason to care about our nation's politics and progress. Paying income tax allows us to feel that our laborers are funding the projects that our government enacts on our behalf. People can happily take more ownership and pride in their communities once they realize their tax dollars contribute toward the well-being of everyone and are necessary for keeping the social programs that many of us depend on afloat. 


Luke (Yes)

While the idea of income tax seems immutable in the modern world, prior to the ratification of the 16th Amendment in 1913, the federal government relied mainly on tariffs, excise taxes, customs duties, and public land sales to fund its operations. From its meager beginnings in 1913, income tax has become increasingly complex, creating a massive industry of accountants, lawyers, and tax advisors who specialize in minimizing tax liability, ultimately resulting in a burden on taxpayers and placing a competitive disadvantage on small businesses.

Were the income tax eliminated, Americans would have more of their hard-earned money to spend, save, or invest, which could lead to increased innovation and productivity, creating more job opportunities. Eliminating income tax would also make the government more accountable and efficient with its spending. Relying on other sources of revenue, such as sales tax, property tax, or user fees, would force the government to be more responsive to the needs of the people. This would also simplify the tax system and reduce compliance costs for individuals and businesses. 

Eliminating income tax would create a system where people are free to keep the fruits of their labor and use their earnings as they see fit. Doing so also promotes individual responsibility, self-reliance, and innovation, as people would be incentivized to work harder and invest more in their businesses. By reducing the power of politicians and making the government more accountable and efficient with its spending, the elimination of income tax would benefit not only individuals but also society as a whole. In short, the US should abolish income tax to promote economic growth, individual freedom, and prosperity.

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