Impact of Tax Reform on US

The economy of United States of America is one of the strongest economies in the world. However, maintaining the growth rate is also important. For the purpose, several tax reforms have been introduced and impact of tax reforms on US economy is expected to be fruitful for the country. A number of tax reforms have been designed to stimulate the capital formation process. The tax reforms of United States of America include relief in the capital gains tax for the individuals, tax relief for gift and estate tax and so on. At the same time, tax structure for the US corporate sector has also been revised and some important exemptions were provided to the sector.

According to some surveys done in the 90s, United States of America should reform the tax laws in such a manner that it can stimulate the savings and investment activities. These should be done to maintain the strong hold on the world economy in the future.

The surveys also bring forth the fact that the rate of non-residential investment in the country and the private savings rate at that particular time went down unexpectedly. On the other hand, the business investments in United States of America was also low. According to the experts, these investment and savings rates are related to the growth of production level as well as to the creation of new job opportunities.

The experts of the field have suggested to introduce consumption tax and to provide huge relief in the income tax. Tax codes based on the consumption are expected to stimulate positive impact of tax reforms on US savings and investment sector. There are several assumptions that are related to the consumption taxes and one of this is that concentration of wealth would help the rich people. On the other hand, there are a number of other objections also and one such objection is that there are several ways of minimizing the taxes that can cause huge losses to the government as well as to the whole country.

Again, the impact of tax reforms on US is directly related to the structure of consumption taxes in the country. The consumption taxes can be of two different kinds and these are the value added taxes and taxes imposed on the expenditures. Both these tax patterns of consumption tax are effective enough to replace the income based taxes.

There are several other type of taxes that are also good enough to replace the income taxes in the country. These taxes are the flat tax and another one is the income tax that would provide tax exemption for savings. These taxes are capable enough to mark a lasting impact of tax reform on US economy. These taxes and especially the flat tax are designed to eradicate the double taxation that is an important feature of income tax.