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Kozi Checks & Balances TaxTactics News

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September 18.2025

2 Minutes Read

Exploring the Progressivity of the US Tax Code: Fairness in Taxation

Calculator and pen on financial spreadsheet, illustrating US tax code progressivity.

A Closer Look at the Progressivity of the US Tax Code

The question of fairness in the tax code often boils down to perceptions of progressivity, or the belief that wealthier individuals should carry a larger share of the tax burden. According to the Tax Foundation's latest survey, a significant 65% of U.S. taxpayers believe the tax system is unfair, with 58% arguing that high earners should contribute more. This sentiment is particularly relevant as discussions around tax equity continue in economic and political spheres.

Understanding Progressive vs. Regressive Taxation

A tax system is considered progressive when those who earn more pay a higher percentage of their income in taxes. Conversely, a regressive system disproportionately impacts lower-income earners. In examining the U.S. tax structure, it’s clear that federal income taxes are largely progressive. They reflect a tiered system where tax rates increase alongside income levels.

The Impact of the Progressive Tax System

Data shows that the top 50% of earners are responsible for 97% of federal income tax revenue, illustrating the system’s shift toward greater progressivity over the last century. Notably, low-income families often benefit from tax credits, such as the Earned Income Tax Credit, which can lead to negative effective tax rates for those in the lowest earning bracket.

Future Directions: What Lies Ahead?

While the recent One Big Beautiful Bill Act (OBBBA) maintains the existing progressive structure, concerns remain about future adjustments. As fiscal discussions evolve, the integrity of the progressive framework will likely remain a pivotal issue. Stakeholders are keen to see how shifts in policy will either enhance or undermine equitable tax contributions across different income levels.

Takeaway: Understanding Tax Progressivity Matters

In a society where economic disparities are prevalent, understanding the implications of the tax code is crucial. For taxpayers — especially those feeling the burden of tax contributions — staying informed and engaged in these discussions can influence future policy decisions that affect equitable tax structures.

Tax Deduction Deep-Dives

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09.06.2025

Why Lowering the VAT Registration Threshold Benefits UK Economies

Update Why the VAT Registration Threshold Needs Rethinking The United Kingdom's value-added tax (VAT) registration threshold has become a hot topic among policymakers. Currently set at £90,000, this threshold is one of the highest in the OECD, which raises questions about its impact on small businesses and the economy. Instead of considering a higher VAT threshold, the government should explore lowering or potentially abolishing it altogether. The Flaws of a High VAT Registration Threshold By being below the VAT registration threshold, small businesses are exempt from collecting VAT on their sales, but they also miss out on reclaiming VAT paid on purchases. While this arrangement might seem beneficial for small firms, it inadvertently creates a financial distortion. Economically, it encourages micro-businesses to remain stagnant rather than expand, ultimately hindering overall productivity. According to the Office of Budget Responsibility (OBR), the financial impact can be substantial—an estimated annual loss of £350 million in turnover due to businesses adjusting their growth strategies to avoid surpassing the VAT threshold. The Need for Structural Reforms Raising the VAT threshold may seem like a supportive measure for small businesses; however, it leads to an inefficient market where larger firms face competitive disadvantages. Some economists, including those from the International Monetary Fund (IMF), suggest that firms close to the threshold tend to slow down their growth by approximately one percentage point, illustrating how tax policy can inadvertently stifle business growth. Looking Forward: A Better Approach Instead of increasing the VAT threshold, lowering it or simplifying the tax system could yield better results for businesses and government revenues alike. This could involve reducing exemptions or modifying compliance requirements, creating a fairer landscape for all sizes of businesses. Streamlined VAT processes could balance administrative burdens while simultaneously increasing tax compliance. Conclusion: A Call for Action As discussions around VAT policy evolve, it's crucial for stakeholders, including small business owners and policymakers, to advocate for changes that foster growth rather than encourage stagnation. The implications of maintaining an excessively high VAT registration threshold reach far beyond small businesses; they directly affect economic growth and efficiency within the UK. Engaging in a thoughtful debate over lowering this threshold can protect the interests of burgeoning entrepreneurs while strengthening the economy at large.

08.28.2025

How OBBBA Affects State Taxes: What Taxpayers Need to Know

Update Understanding the State Tax Landscape Post-OBBBA The One Big Beautiful Bill Act (OBBBA) has sent ripples through state tax systems as Congress passes significant federal tax changes. This monumental legislation not only affects federal tax performance but creates a trickle-down effect impacting state tax codes across the nation. Given that many states tether their tax systems to federal provisions, state lawmakers now face pivotal decisions that will affect taxpayers substantially. The Connection Between Federal and State Taxes As states often utilize the federal tax structure as a foundational reference for their tax codes, the provisions of OBBBA can lead to automatic adjustments in state tax bills. These changes can profoundly affect personal deductions and business tax structures, influencing overall economic growth. For instance, the new personal deductions introduced have been critiqued for providing limited benefits, potentially leaving many taxpayers in a challenging position as they navigate these changes. Pro-Growth Business Provisions One of the positive aspects of OBBBA is its emphasis on pro-growth business provisions aimed at removing barriers to investment and job creation. Such provisions are likely to incentivize businesses to flourish, stimulating the economy within states. By fostering investment, these initiatives can lead to job creation and higher tax collections in the long run. Implications for State Budgets As state budgets are influenced by federal laws, state lawmakers need to strategize their fiscal policies in the context of the new federal landscape introduced by OBBBA. Understanding these implications is essential for local businesses and individuals who need to prepare for the budgetary adjustments that come with these federal changes. Actionable Insights for Taxpayers Taxpayers should keep an eye on how changes in the OBBBA affect their specific states. Engaging with local lawmakers about tax policies and staying informed through trusted resources can empower taxpayers to navigate these changes effectively. This proactive approach is essential as individuals and businesses adjust to the evolving tax environment.

08.27.2025

Why the BLS Must Remain Politically Neutral for Effective Taxpayer Protection

Update Understanding the Role of the Bureau of Labor Statistics (BLS)The Bureau of Labor Statistics (BLS) is a crucial entity that gathers economic data to reflect the state of the U.S. economy. One critical role of the BLS is to provide accurate inflation figures, which are essential for policy decisions at both governmental and individual levels. However, recent events have raised concerns over potential political influence on the BLS's operations. When inflation is inaccurately reported, it can lead to widespread consequences, affecting everything from tax rates to government spending.The Consequences of Misinformed TaxpayersAs highlighted by the recent discussion surrounding the nomination of E.J. Antoni, there is a danger that politically motivated alterations in economic reporting could mislead taxpayers. With inflation often dubbed a "hidden tax," any misrepresentation in data can limit the purchasing power of citizens, making goods and services costlier over time. This could result in unintended financial distress, as taxpayers grapple with higher costs while their salaries remain stagnant.Balancing Data and PoliticsIn a well-functioning democracy, economic data should serve the public interest, unaffected by partisan agendas. The integrity of the BLS is essential; its reports must be held as benchmarks of truth for sound economic policy. If the administration seeks to influence outcomes through selected data manipulation, it risks losing public trust, leading to poor policy choices that may exacerbate economic challenges.Future RepercussionsThe integrity of economic data cannot be understated. If the BLS sways into the political arena, we could see a future where decisions are made based on distorted realities rather than factual data. Policymakers must commit to preserving the autonomy of key data-gathering institutions to ensure taxpayers receive accurate information upon which they can base important financial decisions.

Exploring the Progressivity of the US Tax Code: Fairness in Taxation

A Closer Look at the Progressivity of the US Tax Code

Understanding Progressive vs. Regressive Taxation

The Impact of the Progressive Tax System

Future Directions: What Lies Ahead?

Takeaway: Understanding Tax Progressivity Matters

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