The tax system can be a confusing beast. That’s why we’ve put together some of the tax changes policy makers should be pursuing in 2016.
Change the Inflation System
Only half of our states tag their income tax brackets to inflation. This is damaging for everyone, especially those on low incomes. Citizens are therefore paying higher taxes, even though their incomes aren’t increasing. All states should be indexed to inflation to ensure income tax reflects the wider economy.
Expand Earned Income Tax Credit
It’s not the perfect tax credit, but it’s effective at relieving the working poor. It helps to reduce the damage caused by certain states and their regressive tax systems. States without one should adopt it and those with the tax credit should expand on it.
Independent Tax Tribunals
Barely half of our states employ independent experts to chair tax disputes. All the other states have tribunals chaired by people from the revenue department. This state of affairs is borderline corrupt and there’s nothing fair about it. States should adopt a more equitable system.
Go Against Tax Incentives
Tax incentives are unnecessary and unfair. They often waste money and they are against the principles of the free market. Although this is a mammoth task, policy makers should not neglect it.
More Transparency
Finally, there should be a higher level of openness within the tax system. State governments should be more forthcoming with policy information. The opinions of tax experts should not be restricted. It should be released to the public.
What tax changes would you make in 2016?
Image credit: Danny Huizinga