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The US tax system needs rebuilding
by Lawrence Summers
The writer of the article is Charles W. Eliot university professor at Harvard University and a former US Treasury Secretary
The article was too long to be pasted here and also needed permission to paste to any websites, so I only provided the original article's link in the thread below.
original article's link: http://www.ft.com/intl/cms/s/2/38274f48-5e4f-11e1-8c87-00144feabdc0.html#axzz1x7fhAaw9
I think everyone, who finds and posts great articles in this forum, should carefully read and comment the forwarded article, and then let others to comment your thread. Consequently, all of us could learn something from the article. Do not just post a forwarded article without your own comments for adding "hot and great (精华)" and earning experience points. The reason is that you would not learn anything from the article without carefully reading and analyzing the article.
I did not analyze the whole article again, but I analyzed three main points that the author mentioned about the current U.S. tax system and its ongoing reform.
The author's first main point was to stress that "the U.S. will need to mobilise more revenue" (Eilot, 2012). Back to Bush's Administration, the federal government cut taxes for the rich. Currently, Obama's Administration cuts taxes for the low-income family and the middle class in order to help them recover from the downturn economy as soon as possible. However, cutting tax is not good in the long run not only because cutting tax will hurt Americans' future generations' benefits. Another reason is caused by the rising cost of healthcare and the cost of healthcare reform, and other government spending projects. Healthcare reform is a big topic, so I would not further discuss it here. Nevertheless, all of government projects cannot be implemented without earning enough revenue, but that does not mean the government should rely on borrowing a lot of money from other countries. The reason is that Americans' future generations have to pay back the bill the current people owes that will increase their future economic burdens.
Cutting non-urgent projects and rasing taxes on the rich taxpayers at the same time should be a solution to reform the current "unfair" tax system. In his second main point, the author explained more details about why we should raise taxes on the rich to reduce the income gap among different classes in the U.S. You can read his opinion in the original article, so I will not further discuss it here.
Moreover, the author's third point was to demonstrate U.S. tax code and marginal tax rates. Of course the rich has to pay higher marginal tax rates than the low-income households. However, the current upper limit marginal tax rates is below 50%. I haven't searched any data, so I cannot give you a detailed analysis here. But one thing is clear that the U.S. government should set tax breaks on low-income families and raise taxes on the rich to reduce the income gap between these two classes in the ongoing tax system reform.
By the way, I have analyzed the U.S. tax reform for Obama's Administration in 2010, but I don't have time to modify and share my paper with you here today. If I have time, I will do so later this summer or this fall.
I only took an hour to read and comment the article. If you find any mistakes I made in my comments, please point them out, and I will correct them later on. Now you guys are welcome to continue the discussion below.
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