Student 1

Sally Student

Ms. Voyles

English 102

23 March 2022

Outline: Federal Income Tax

Thesis Statement: There should not be a federal income tax and only a flat federal sales tax

because income tax was originally introduced to pay for war, income is

currently taxed twice: before the paycheck and when a purchase is made,

and a retail tax will make the system more progressive.

I. Taxes were originally introduced for war

A. During the Civil War, Abraham Lincoln introduced income tax to pay for war

costs.

1. The first federal income tax was introduced in 1862, and Americans were

taxed at a rate of three percent for incomes between $600 and $10,000,

and a rate of five percent for incomes above $10,000.

2. This was also the first example of a graduated income tax, meaning that

individuals who earn more money are taxed at a higher percentage.

B. In 1913, the Sixteenth Amendment was passed in order to collect income tax.

1. This was due to the threat of World War I, which pressured all of the states

to pass the amendment.

2. Shortly after the passage, income tax rates were raised all the way up to

seventy-seven percent in order to pay for the war effort (“Historical

Highlights of the IRS”).

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C. In World War II, tax rates reached the highest level in American history at

ninety-four percent for incomes over $200,000 (“Taxation and Tax Reform”).

II. Some argue that taxes pay for necessary programs

A. Sixty percent of federal income taxes are responsible for funding Social Security,

Medicare, national defense, et cetera

B. When asked where Americans thought it would be best to cut taxes, most did not

vote for any of the previously listed programs and instead voted for much smaller

parts of the budget that would not make a dramatic difference in the amount

collected in income tax (Linden and Ettlinger 26-27).

III. Under a retail tax, the same amount of taxes would be collected.

A. Social Security and Medicare are collected separately from federal income tax,

and these programs should be kept the way they are, but instead remove the

federal income tax and change it to a retail tax.

1. This ensures that Americans do not have to file their taxes at the end of the

year and worry that they did not pay enough into the system. They have

already paid their fair share throughout the course of the year.

B. The federal government will still collect the same amount of revenue as it

currently does under a retail tax, but the tax is paid when a purchase is made, not

before one even receives his or her check (Americans for Fair Taxation 158-159).

IV. Americans are taxed twice

A. Currently, income tax is taken out of everyone’s paycheck and is collected when

something is purchased
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1. A flat sales tax prevents this, because Americans are then only taxed once

when a purchase is made.

B. Americans should have a right to the money that they have earned from working.

1. Before a paycheck is received, the government has already taken money

out. Americans are already losing money to the government before they

have a chance to spend it on items that they need and/or want.

2. Americans do not receive the full amount of money that they were

promised by their employers because the government has already taken

some of it (Josephson).

V. Some believe that the tax system should be more progressive.

A. The average American pays thirteen percent in federal income tax annually, and if

a retail tax was instituted, many would likely begin to pay more in taxes (Ulbrich

153-154).

B. Most Americans also believe that the federal tax system should be more

progressive than it currently is (Linden and Ettlinger 27)..

C. Necessities are still taxed at the same rate as everything else, meaning that they

will also become more expensive (Ulbrich 153-154).

VI. The FairTax is more progressive.

A. Proposing a retail tax and repealing federal income tax causes every American to

be taxed solely on what is purchased

B. Every item purchased at a store or place of business is taxed at the same rate.
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1. Those who purchase more items (such as the wealthy who buy frivolous,

expensive items) will pay more in taxes versus an average American

family that only buys what is necessary and a little extra.

2. Middle class families would likely not pay more taxes with a retail tax

system because they do not purchase as much (Hoagland 5-6).

C. The taxes on the necessities will actually not be collected

1. Each family, based on the amount of children and adults in the household,

will receive a “prebate,” which is a sum of money received monthly that

will reimburse families for the taxes they paid on necessities.

2. This is based on the size of the family, and does not include income in any

way (Hoagland 9)

VII. Some argue that the FairTax would not change much.

A. If passed, the amount of revenue that is collected by the government would not

change, but would be distributed slightly differently.

1. In order to completely get rid of federal income tax, the Sixteenth

Amendment would need to be repealed

2. In order to do this, another amendment would have to be proposed and

passed through both houses of Congress and all of the states (Vance

168-169).

B. Congress could also reinstate income tax.

1. If the United States enters a time of war or crisis, Congress may decide to

reinstate income tax, which would effectively double the amount of taxes

on Americans.
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C. Congress could also “ruin” the FairTax, making it much more complicated than it

was originally intended to be. When the initial tax code began, it was relatively

simple, and has gotten more complicated over time due to all the extra rules that

have been added (Vance 171).

VIII. Propose an amendment to repeal the Sixteenth Amendment.

A. In order to completely eliminate federal income tax, proposing an amendment to

do so would be best.

1. This ensures that it would be fairly difficult for Congress to reinstate

income tax at any given time.

B. It should be added in the amendment to repeal the Sixteenth Amendment and

declare that federal income tax is unconstitutional unless the United States is in a

war or crisis.

1. If the government needs extra funding, it should be able to get it, but there

must be a declaration of the crisis and why before income tax is able to be

collected again (Rifkin).

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Works Cited

Americans for Fair Taxation. “A Single, Rate Federal Sales Tax is the Best Tax System.” Tax

Reform, edited by Noȅl Merino, 2011, pp. 158-159.

Hoagland, Ken. “What Is the FairTax?” The FairTax Solution: Financial Justice For All

Americans, Sentinel, New York, New York, 2010, pp. 5–6, 9.

“Historical Highlights of the IRS.” IRS, 2 Nov. 2021,

https://www.irs.gov/newsroom/historical-highlights-of-the-irs. Accessed 22 Mar. 2022.

Josephson, Amelia. “Understanding How Income Taxes Work.” SmartAsset, 12 Jan. 2022,

https://smartasset.com/taxes/what-are-income-taxes.

Linden, Michael and Michael Ettlinger. “US Taxes Pay for Programs with Broad Public

Support.” Tax Reform, edited by Noȅl Merino, 2011, pp. 26-27.

Rifkin, Jesse. “Constitutional Amendment Proposal Would Repeal Federal Income Tax and the

16th Amendment Which Authorizes It.” GovTrack Insider, 14 Dec. 2021,

https://govtrackinsider.com/constitutional-amendment-proposal-would-repeal-federal-inc

ome-tax-and-the-16th-amendment-which-236e5df14b14. Accessed 22 Mar. 2022.

“Taxation and Tax Reform.” Issues & Controversies, Infobase, 28 Jan. 2013,

icof.infobase.com/articles/QXJ0aWNsZVRleHQ6MTYyNjQ=. Accessed 22 Mar. 2022.

Ulbrich, Holley. “A Flat Tax Should Not Replace the Current System.” Tax Reform, edited by

Noȅl Merino, 2011, pp. 153-154

Vance, Laurence M. “A Single Rate, Federal Sales Tax Is Not the Best System.” Tax Reform,

edited by Noȅl Merino, 2011, pp. 168-168, 171.