Tax Reform

Running Head : TAX REFORM

Value Added Tax as a Reform Option for the Federal Income Tax

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Value Added Tax as a Reform Option for the Federal Income Tax

Abstract

A Value Added Tax is a form of taxation that nearly every other advanced country has already adopted as a revenue source . In contrast , the United States has not yet resorted to a Value Added Tax . This will discuss a Value Added Tax as a reform option for the federal income tax It will consider

why the United States has not followed the other major economies in the world by adopting a Value Added Tax . This will also address the features of a generic Value Added Tax , its potential to change the current federal tax structure in a positive way , the problems that the enactment of a Value Added Tax in the United States might present , and how to minimize those problems . Finally , some proposed solutions are presented

Introduction

In a famous test conducted in 1997 , Money magazine asked forty-six tax professionals to perform a moderately complex calculation of the tax liability of a hypothetical family . The forty-six different answers they calculated - ranging from 34 ,420 to 68 ,192 - show how complex the Internal Revenue Code has become (Slemrod and Bakija , 2004 . Along with these test results , other data demonstrate the same complexity . The instruction booklet for Form 1040 of tax year 2006 is 143 pages long (Keating , 2004 . Tax law complexity presents many disadvantages...