The document discusses the progressive tax system in the United States and outlines key principles for an effective tax structure, including fairness, adequacy, simplicity, transparency, and administrative ease. It also examines the pros and cons of raising taxes, the impact of different tax types such as income and estate tax, and emphasizes the need for taxes to be used for their intended purposes. Ultimately, it argues that higher earning individuals should incur a higher tax rate to support societal needs.

1. Week 5 Discussion Responses - Econ
Discussion for Response 1
By: P,V
Week 5 - Taxes
Currently, our tax system is a progressive tax system. This
means that the more money you make, the more money you
pay. This way, those who do not struggle to put food on the
table can afford to pay the government. In considering a better
tax system, there should be five fundamental theories: fairness,
adequacy, simplicity, transparency, and administrative ease.
In fairness, everyone pays a fair share of taxes within horizontal
equity meaning that everyone pays a similar proportion of tax.
In adequacy, there should be an adequate amount of taxes to
provide enough revenue to meet the needs of society.
Simplicity meaning that having a simpler tax system will help
taxpayers understand the tax system and, therefore, remain
compliant. Having transparency and knowing who is being
taxed and how much. Everyone is also aware of what the money
is being used for. Finally, with administrative ease compares to
simplicity where the tax system is not too complicated or
expensive for both the taxpayer and collector (Oklahoma Policy
Institute).
Raising taxes has some pros and cons. Some pros include:
ensuring that services to citizens are available and needs, such
as road repair, are completed without needing bonds. Cons
include having a less disposable income to citizens as well as
lowering the consumer expenditure which hurts businesses and
the overall economy. Another con is that raising the tax
encourages excessive government spending.
Some advantages of a progressive tax system include allowing
those who are poorer to live more comfortably. It also helps the
government establish higher tax brackets to generate revenue.
Other advantages of a progressive tax system are that it can

2. potentially produce more total income for the government and it
improves the spending power of those who are of lower
income. Disadvantages include having complex incentives and
rules drive the cost of compliance way up (Murphey, 2017).
Income tax refers to the amount one pays on total income from
businesses to the federal and state governments. Sales tax
refers to the percentage paid by consumers when purchasing
certain items. One involves the business owner and the other
involves the consumer. The estate, or death/inheritance tax also
has pros and cons. Pros include the same amount of tax is
charged to everyone, only approximately 0.2% of people are
eligible for the death tax, almost no employers pay the estate
tax upon transfer, and estates worth more than $5 million have
an average of 55% of net worth that was never taxed. Cons
include assets are taxed at the same rate of liquid assets. The
tax affects lower income families than others. The estate tax is
based on the current value of the property and government can
tax up to 3 times on estate tax (Brandon Gaille, 2015).
Taxes are necessary to pay the government in order for states to
have the necessary things to keep that state running. Having a
healthy tax system based on fairness and simplicity will be key
to a great tax system.
References
Brandon Gaille. (2015, November). Retrieved July 24, 2017,
from 8 Pros and Cons of Death Tax:
http://www.brandongaille.com/8-pros-and-cons-of-death-tax/
Murphey, R. (2017, February 2). IVN. Retrieved July 24, 2017,
from The Pros and Cons of Keeping a Progressive Tax System:
http://ivn.us/2017/02/22/pros-cons-progressive-taxation/
Oklahoma Policy Institute. (n.d.). Retrieved July 24, 2017, from
Characteristics of an Effective Tax System:
http://www.okpolicy.org/resources/online-budget-
guide/revenues/an-overview-of-our-tax-system/

3. Discussion for Response 2
By: B,A
The current tax system in the United States is known as a
progressive tax system, in which increases in taxable amounts
result in an increase in tax rate (Perez, 2016). Attributes
specific to a good tax include being used for intended purposes,
to discourage or redirect individuals from economic activities
that are harmful to the environment, the generation of revenues
in excess of the cost of the tax, and they must be supported by
companies or individuals who are responsible for paying the tax
(Business Case Studies, 2017). Raising taxes is always
controversial, in part due to the nature of increasing expenses
for individuals and businesses, however the increase in tax
revenue can be very beneficial for a particular purpose if
utilized correctly. Taxes are necessary to ensure that the federal
government has funds available to maintain and improve
infrastructure, pay for federal security, and to fund our armed
forces, to name a few, however raising taxes without providing
a specific benefit associated with the increase is a cause for
concern. Using Illinois as an example, the state has faced a poo
financial situation for the past two years that needed to be
addressed entering the new fiscal year in July. Two years
without a budget had left the state with increasing debts and
forced a reduction of state funded labor and projects, so
ensuring a budget was passed was important, even if it meant
allowing for additional taxes to be signed into effect in an effort
to help a failing financial system. State income tax was
increased in an effort to replace funds that were borrowed from
state pension and lottery funds to pay for other activities, which
is precisely what a tax payer does not want to have to pay for.
Ensuring a tax is used for its intended purpose is likely to win
votes, and also helps in making the case for future tax
proposals.
Progressive taxes can be both beneficial and detrimental to
individuals and companies. Specific to why progressive taxes
are good, they push much of the tax burden to those who are

4. most able to pay taxes, people who have a greater societal
influence are likely to pay more, often protects taxpayers during
tax season, and it can be argued that governments are able to
receive the most revenue benefit from progressive
taxes. (Nunes, 2016). Conversely, the negative sides to a
progressive tax system include the potential for inflation to
push taxpayers into a higher tax bracket, less incentive to earn
more income as a result of higher taxation, and also discourages
business investment and expansion (Nunes, 2016).
Income tax vs. sales tax are very different in terms of
treatment, in which an increase in sales tax does not necessarily
deter consumers from purchasing goods, whereas one or two-
time per year income tax collections have potential to
negatively impact consumers. Income tax allows for certain tax
brackets to be used for different levels of income, often
impacting higher earning individuals more than those in the
lower-class, however sales tax is based on goods purchased with
no consideration to the income of the person buying the good or
service. Certain states operate without revenue from income tax,
whereas other states operate with no sales tax: removing one
form of taxation must be offset with an increase in another form
of taxation, otherwise a government faces the challenge of not
having adequate revenues to operate.
Taxing an estate is often argued as being a penalty to those
who were successful, and can be thought of as a double tax on
property that has already been taxed. Estate tax provides no
benefit for successful individuals to save money and property
due to the impending tax, and in the event of decedent’s
obtaining a business, the business may be negatively impacted
as a result of less cash due to taxation. The estate tax does
provide benefit to the government, including increased revenue,
helps to spread wealth across many hands, influences charitable
contributions, and only a small portion of decedent’s dying each
year are subject to the tax (Rywick, 2014)
Specific to our current tax system, I would like to see tax
revenue tracked to ensure that taxes are used for the intended

5. purpose. Increasing taxes should not always be viewed as a
negative event, however individuals often default to defending
their income and trying to prevent unnecessary amounts of their
income being taken by the government. The negative image of
taxation can easily be curbed by justification and support in the
form of informing individuals of the benefits of each respective
tax. Hiding tax increases in a budget, or forcing tax increases
through in an effort to “fix a problem” does not allow for the
creation of confidence in government. Additionally, I feel it is
only fair that higher earning individuals should pay a higher tax
rate. Enforcing taxation on high earning individuals should take
place, while phasing out benefits at a certain income level that
currently allow for the wealthy to reduce their taxable rate.
Business Case Studies. (2017). Matching taxation principles
with environmental policies. Retrieved from Business Case
Studies: http://businesscasestudies.co.uk/hm-customs-
excise/matching-taxation-principles-with-environmental-
policies/some-features-of-a-good-tax.html
Nunes, G. (2016, April 21). Pros and Cons for the U.S. of Flat
vs. Progressive Taxes. Retrieved from Tough Nickel:
https://toughnickel.com/personal-finance/Flat-Tax-vs-
Progressive-Tax-Pros-and-Cons-for-the-US#
Perez, W. (2016, November 08). Federal Income Tax Brackets.
Retrieved from The Balance:
https://www.thebalance.com/federal-income-tax-brackets-
3193155
Rywick, B. (2014, October 6). Pros and cons of the federal
estate tax. Retrieved from Forbes:
https://www.forbes.com/sites/kellyphillipserb/2014/10/06/guest-
post-pros-and-cons-of-the-federal-estate-tax/#43ea712b75a6
Week 5 Discussion Responses - Econ
Discussion for Response 1

6. By: P,V
Week 5 - Taxes
Currently, our tax system is a progressive tax system. This
means that the more money you make, the more money you
pay. This way, those who do not struggle to put food on the
table can afford to pay the government. In considering a better
tax system, there should be five fundamental theories: fairness,
adequacy, simplicity, transparency, and administrative ease.
In fairness, everyone pays a fair share of taxes within horizontal
equity meaning that everyone pays a similar proportion of tax.
In adequacy, there should be an adequate amount of taxes to
provide enough revenue to meet the needs of society.
Simplicity meaning that having a simpler tax system will help
taxpayers understand the tax system and, therefore, remain
compliant. Having transparency and knowing who is being
taxed and how much. Everyone is also aware of what the money
is being used for. Finally, with administrative ease compares to
simplicity where the tax system is not too complicated or
expensive for both the taxpayer and collector (Oklahoma Policy
Institute).
Raising taxes has some pros and cons. Some pros include:
ensuring that services to citizens are available and needs, such
as road repair, are completed without needing bonds. Cons
include having a less disposable income to citizens as well as
lowering the consumer expenditure which hurts businesses and
the overall economy. Another con is that raising the tax
encourages excessive government spending.
Some advantages of a progressive tax system include allowing
those who are poorer to live more comfortably. It also helps the
government establish higher tax brackets to generate revenue.
Other advantages of a progressive tax system are that it can
potentially produce more total income for the government and it
improves the spending power of those who are of lower
income. Disadvantages include having complex incentives and
rules drive the cost of compliance way up (Murphey, 2017).
Income tax refers to the amount one pays on total income from

7. businesses to the federal and state governments. Sales tax
refers to the percentage paid by consumers when purchasing
certain items. One involves the business owner and the other
involves the consumer. The estate, or death/inheritance tax also
has pros and cons. Pros include the same amount of tax is
charged to everyone, only approximately 0.2% of people are
eligible for the death tax, almost no employers pay the estate
tax upon transfer, and estates worth more than $5 million have
an average of 55% of net worth that was never taxed. Cons
include assets are taxed at the same rate of liquid assets. The
tax affects lower income families than others. The estate tax is
based on the current value of the property and government can
tax up to 3 times on estate tax (Brandon Gaille, 2015).
Taxes are necessary to pay the government in order for states to
have the necessary things to keep that state running. Having a
healthy tax system based on fairness and simplicity will be key
to a great tax system.
References
Brandon Gaille. (2015, November). Retrieved July 24, 2017,
from 8 Pros and Cons of Death Tax:
http://www.brandongaille.com/8-pros-and-cons-of-death-tax/
Murphey, R. (2017, February 2). IVN. Retrieved July 24, 2017,
from The Pros and Cons of Keeping a Progressive Tax System:
http://ivn.us/2017/02/22/pros-cons-progressive-taxation/
Oklahoma Policy Institute. (n.d.). Retrieved July 24, 2017, from
Characteristics of an Effective Tax System:
http://www.okpolicy.org/resources/online-budget-
guide/revenues/an-overview-of-our-tax-system/
Discussion for Response 2
By: B,A
The current tax system in the United States is known as a
progressive tax system, in which increases in taxable amounts
result in an increase in tax rate (Perez, 2016). Attributes

8. specific to a good tax include being used for intended purposes,
to discourage or redirect individuals from economic activities
that are harmful to the environment, the generation of revenues
in excess of the cost of the tax, and they must be supported by
companies or individuals who are responsible for paying the tax
(Business Case Studies, 2017). Raising taxes is always
controversial, in part due to the nature of increasing expenses
for individuals and businesses, however the increase in tax
revenue can be very beneficial for a particular purpose if
utilized correctly. Taxes are necessary to ensure that the federal
government has funds available to maintain and improve
infrastructure, pay for federal security, and to fund our armed
forces, to name a few, however raising taxes without providing
a specific benefit associated with the increase is a cause for
concern. Using Illinois as an example, the state has faced a poo
financial situation for the past two years that needed to be
addressed entering the new fiscal year in July. Two years
without a budget had left the state with increasing debts and
forced a reduction of state funded labor and projects, so
ensuring a budget was passed was important, even if it meant
allowing for additional taxes to be signed into effect in an effort
to help a failing financial system. State income tax was
increased in an effort to replace funds that were borrowed from
state pension and lottery funds to pay for other activities, which
is precisely what a tax payer does not want to have to pay for.
Ensuring a tax is used for its intended purpose is likely to win
votes, and also helps in making the case for future tax
proposals.
Progressive taxes can be both beneficial and detrimental to
individuals and companies. Specific to why progressive taxes
are good, they push much of the tax burden to those who are
most able to pay taxes, people who have a greater societal
influence are likely to pay more, often protects taxpayers during
tax season, and it can be argued that governments are able to
receive the most revenue benefit from progressive
taxes. (Nunes, 2016). Conversely, the negative sides to a

9. progressive tax system include the potential for inflation to
push taxpayers into a higher tax bracket, less incentive to earn
more income as a result of higher taxation, and also discourages
business investment and expansion (Nunes, 2016).
Income tax vs. sales tax are very different in terms of
treatment, in which an increase in sales tax does not necessarily
deter consumers from purchasing goods, whereas one or two-
time per year income tax collections have potential to
negatively impact consumers. Income tax allows for certain tax
brackets to be used for different levels of income, often
impacting higher earning individuals more than those in the
lower-class, however sales tax is based on goods purchased with
no consideration to the income of the person buying the good or
service. Certain states operate without revenue from income tax,
whereas other states operate with no sales tax: removing one
form of taxation must be offset with an increase in another form
of taxation, otherwise a government faces the challenge of not
having adequate revenues to operate.
Taxing an estate is often argued as being a penalty to those
who were successful, and can be thought of as a double tax on
property that has already been taxed. Estate tax provides no
benefit for successful individuals to save money and property
due to the impending tax, and in the event of decedent’s
obtaining a business, the business may be negatively impacted
as a result of less cash due to taxation. The estate tax does
provide benefit to the government, including increased revenue,
helps to spread wealth across many hands, influences charitable
contributions, and only a small portion of decedent’s dying each
year are subject to the tax (Rywick, 2014)
Specific to our current tax system, I would like to see tax
revenue tracked to ensure that taxes are used for the intended
purpose. Increasing taxes should not always be viewed as a
negative event, however individuals often default to defending
their income and trying to prevent unnecessary amounts of their
income being taken by the government. The negative image of
taxation can easily be curbed by justification and support in the

10. form of informing individuals of the benefits of each respective
tax. Hiding tax increases in a budget, or forcing tax increases
through in an effort to “fix a problem” does not allow for the
creation of confidence in government. Additionally, I feel it is
only fair that higher earning individuals should pay a higher tax
rate. Enforcing taxation on high earning individuals should take
place, while phasing out benefits at a certain income level that
currently allow for the wealthy to reduce their taxable rate.
Business Case Studies. (2017). Matching taxation principles
with environmental policies. Retrieved from Business Case
Studies: http://businesscasestudies.co.uk/hm-customs-
excise/matching-taxation-principles-with-environmental-
policies/some-features-of-a-good-tax.html
Nunes, G. (2016, April 21). Pros and Cons for the U.S. of Flat
vs. Progressive Taxes. Retrieved from Tough Nickel:
https://toughnickel.com/personal-finance/Flat-Tax-vs-
Progressive-Tax-Pros-and-Cons-for-the-US#
Perez, W. (2016, November 08). Federal Income Tax Brackets.
Retrieved from The Balance:
https://www.thebalance.com/federal-income-tax-brackets-
3193155
Rywick, B. (2014, October 6). Pros and cons of the federal
estate tax. Retrieved from Forbes:
https://www.forbes.com/sites/kellyphillipserb/2014/10/06/guest-
post-pros-and-cons-of-the-federal-estate-tax/#43ea712b75a6