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The need for tax restructuring in the United States has been made quite evident due to the growing levels of government spending and taxation. Social security is currently growing at a quicker rate than is being collected and will exceed SECA/FICA collections by 2017. Medicare and interest on government debt will begin to grow at an alarming rate in the next 30-40 years, culminating in 2045 with them composing nearly half of the total government spending. In fact in order to balance the budget deficit the government would have to eliminate all discretionary spending by 2027 and this is obviously not a feasible solution. So it is apparent that the funds coming in are not going to be sufficient in the future to support the current infrastructure. Also, there is the retirement of the baby boomers leading to a greater percentage of adults in retirement. The Old-Age dependency ratio, which describes the ratio of retirees to working class, continues to shrink. Thus, the demand for social security will be greater in the future and the working class contributing to the funds will be smaller. Not to mention the tax cuts administered in 2001/2003 will expire in 2010, leaving a void for new tax legislation. Also, corporate tax rates are already at a high level and thus increasing them anymore would result in negative international commerce effects. Hence, leaving a need for restructuring rather than simply increasing rates.
It does not appear that our country is in store for another dramatic change to the income tax system similar to that of the Reagan Administration. This is due to the very different political landscape of today in ...