Objectives of Tax Reform

There are different objectives of tax reform. These objectives focus on the strengthening of the present tax system and widening its base. An ideal tax system should be simplified and effective in nature. There has been a significant progress in the tax system of the United States, still some progress is required.

The objectives of tax reform can be broadly categorized into the following:

Efficiency: A number of initiatives have been taken to increase the efficiency of the tax system. Individual tax rates are diminished. Capital gains tax rates and dividend tax rates have been slashed to 15%. There has been liberalization in savings instruments like Individual Retirement Accounts or IRAs. However, these changes should be made permanent.

Limited Government: The corporate income tax and 50% of the payroll tax charged at 15.3% cause a substantial amount of burden on people. This tax code is invasive in nature and individuals are treated partially. This problem should be sorted out.

Simplification: The volume of tax regulations has gone up to a significant extent. A number of particular tax benefits have been added to the tax codes by the United States Congress. Therefore, there is an urgent need to make the tax system simplified.

The tax reforms can be simplified in the following manner:

Lower tax evasion and tax avoidance
Improved economic decision making
Decreased cost and time for organizing, planning and implementation
Lower government and taxpayer faults

The efficiency of tax reforms can be increased in the following manner:

Decreased marginal tax rates
Diminished taxation on investment and savings
Higher development and increased earnings
Same treatment for properties, industries and investments

The tax reform option "Limited Government" can be emphasized in the following ways:

Higher disclosure of tax to the common public in order to ensure that they are able to determine the expenses of the government
Lesser and slowly increasing tax bases for improved management of the total tax burden
Uniform treatment of people and the termination of social engineering regarding tax codes
Optimization of secrecy and fundamental individual rights