Tax Policy Source of Debate in U.S. Politics

Over the course of the 2008 presidential campaign, the state of the economy has emerged as the top issue on voters' minds. Record high prices for food and gasoline, and the tighter market for credit have all combined to create a nervous population. As a result, the issue of tax policy has again become a source of debate.

Taxation in America holds a special place in the society. American culture and history celebrates independence and the spirit of innovation, and the belief that people who build and create businesses should have the right to keep most of what they earn. Indeed, the seeds of the American revolution were tax revolts by the colonists against the British monarchy - "no taxation without representation" was the revolutionary battle cry.

Tax policy and the Internal Revenue Service, America's tax collecting agency, have been used as powerful instruments of political influence. Today's economic situation has brought calls to suspend the federal gas tax. There have also been calls to levy more taxes on "Big Oil" - a nickname often used to describe major U.S. oil companies. Those who welcome such calls see higher taxes as a way to teach wealthy corporations a lesson in equality as oil companies record huge profits.

There is no shortage of proposals to reduce taxes in American politics. Some argue for a flat tax, where all citizens pay the same percentage of their income to the government, regardless of income. Others advocate a so-called "Fair Tax," where income taxes would be eliminated and the Internal Revenue Service abolished, and replaced with a national retail sales tax.

Democrats typically are more comfortable with raising taxes, particularly on the wealthy. Republicans tend to prefer low taxes. One of the first actions of the Bush administration was to sign legislation cutting certain taxes. Those tax cuts - many of which are scheduled to expire in 2010 - are now at the center of the presidential campaign.

Barack Obama advocates letting Bush's tax cuts for the wealthiest Americans expire and using those additional funds to pay for health care and other programs. He supports reversing tax cuts applied to income from stock sales and dividends, which he says will help the middle class. He also wants to create tax incentives that will encourage companies to keep employees in the United States rather than hiring people overseas. Hillary Clinton also wants to let the Bush tax cuts for the wealthiest Americans expire. Republican McCain at first opposed the Bush administration tax cuts, but now wants to see them extended. He also wants to establish a simpler tax system that closes loopholes for special interests.

Source: U.S. Department of State

judythpiazza@newsblaze.com