U.S. Economy

The US tax system an issue viewed to be complicated in terms of corporate tax code and lacking a territorial approach like other leading and developed countries. It is beset with problems which makes it ineffective in raising enough revenue for government expenditure. This is majorly observed with federal system of taxation that failed to raise sufficient finances to fund the federal government expenditure. In fact, the government debt has continued to rise over the last decade under the Obama administration which shows that the deficit in federal government spending is always increasing. The constant federal deficit and national debt is a major economic issue that is in the mind of United States public that bears the burden (Rubin & Timiraos, 2016). The overall result of the current US tax system is failure to produce positive economic growth and fairness between the rich and ordinary folks.  

There is a need t to introduce tax reforms aimed at increasing the amount of tax collection in order to lower the tax deficit which leads to higher national debt.  The tax system should focus creating an enabling business environment that allows economic growth by reducing the interest rates. The system should also consider increasing taxes especially for the rich class so as to cater for the deficit and at the same time not burdening the low income tax payers (Stepanyan, 2003). Reforming the tax system to enhance growth is the better option in this case since it will widen the tax base.

The federal government should encourage a taxation system that translates into lower interest rates to encourage economic growth. The system will manage to pay government spending, treat all the tax payers fairly and put in place incentives for productive activity. The state and local governments should relax policies that make the business environment unfavorable (Rubin & Timiraos, 2016).

Reference

Stepanyan, V. (2003). Reforming Tax Systems: Experience of the Baltics, Russia, and Other Countries of the Former Soviet Union. Washington: International Monetary Fund.

Rubin, R., Timiraos, N. (2016).Is the Federal Budget Deficit an Urgent Problem? Retrieved from: http://blogs.wsj.com/economics/2016/10/20/is-the-federal-budget-deficit-an-urgent-problem/