Taxation systems are usually modeled in such a way that they take into consideration the social welfare of the citizens. The government and other policy makers have the responsibility of ensuring that the system takes into account the needs of the citizens. The bottom line is that taxation should foster equal distribution of resources. The rate of taxation is usually arrived at after several considerations have been made. The rates are not fixed as they depend on the various economic changes. The issue of how taxation should be distributed among the different economic classes is yet to be addressed. Whenever economic turbulence increases, the policy makers adjust the taxation rates in an effort to stabilize it. When it comes to income tax rates, the policy makers assume that all citizens have equal preferences on leisure and consumption. Apart from adopting a taxation system that is welfare considerate, it is also the policy makers’ prerogative to offer incentives to the tax payers. In trying to achieve this balance, the government stands to face opposition from certain quarters of the population. This is because for the system to be stabilized, the government has to streamline tax rates with its own incomes and that of its citizens. This means that consumers of a certain product or people of a certain economic class can be taxed differently. This is the reason why taxation is a subject of such passionate debate as far as a country’s economy is concerned. Taxation is directly connected to economic growth. However, this does not point to definite patterns. For example, higher taxes do not necessarily mean stunted economic growth and vice versa. Tax adjustment usually serves to shift spending towards areas that stimulate economic... ... middle of paper ... ...he rich utilize more resources in terms of finances and human capital, thereby justifying their higher tax rates. The debate on whether the rich pay more or less taxes is likely to stay alive depending on the prevailing economic policies and situations. When put in an economic context, both sides of the argument differ to some level. While raising taxes for the rich may be a popular opinion among the citizenry, it does not always translate to positive economic outcomes. Whether the rich pay their fare share of taxes, still remains a matter of opinion. However, it is the duty of the policy makers to ensure that the tax system supports economic growth. Works Cited Benson, Tim, and Edward White. “Do the Rich Pay their Fare Share?” Scripps Treasure Coast 9 Oct. 2011: 1. Print. Lambro, Donald. "Rich Shoulder Tax Burden." Stow City Journal 8.1 (1995): 1. Print.
Introduction: In the year 1862 during the civil war congress implemented the first income tax in America. It was 3% per year. However, it was not until 1913 when the 16th Amendment to the Constitution was passed, which granted the government the ability to impose a tax on individuals’ income. Since then it has been an issue to determine how much people should be taxed. Tax rates in America change drastically; for example, in 1963 a person in the highest tax bracket would give 90.8% of their income to the government. In contrast, that same person would only pay 28.0% in 1988. The tax rate for income tax is an issue because for every dime that someone pays in taxes is one dime that they are not able to spend themselves. Additionally, people
One person may see that the increase taxation on the poor and the decrease taxes on the wealthy is not an issue because the wealthy pay a lot of taxes already. However, many people don’t realize the fact that, yes, the wealthy are paying a lot of taxes because they make more money, but they can afford to pay more. Recently, in a CNN article, more than forty millionaires want their taxes to increase, which proves the fact that the wealthy have plenty of money to give back to the community. In addition, their just going to keep getting wealthier and wealthier by the
This paper will take a close look at the concepts of the "flat tax," and look at the possible benefits and potential failings. Although there is a basic format to the flat tax, there are multiple flat tax proposals that have been offered by conservatives. Along with critiquing the basic format of the flat tax, this paper will compare an...
The effect that the rich have in policies is enormous and has been discussed in
Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.
Taxes in the United States include payroll taxes, property taxes, sales taxes, and a multitude of others. These taxes may be imposed on individuals, business entities, estates, trusts, or other forms of organizations. In general, there is a lot of inquiry on the current tax system. With endless loopholes, a regressed economy, and corruption there has been widespread anger on the current structure of taxation. Consequently, the wealthy have managed to become even richer despite the economic crisis. Furthermore, many taxpayers in the upper class have found loopholes to avoid substantial taxation or otherwise known as tax evasion. (Stewart 2013) Tax evasion has only grown over the years and with the national debt has become a major issue. What is more, is the intense complexity of the entire taxation process. Addressing all the issues and problems regarding the taxation structure is a meticulous and arduous process. With this in mind, politicians from both parties have tried to address individual issues within the taxation paradigm. Being that the United States has the highest corporate tax in the globe, politicians have tried to change policy regarding taxation on businesses. (Sullivan 2013) How...
But when truly considering it, if taxes were raised on the rich it would minimize the large inequality gap without changing or impacting job growth or economic recovery (Fieldhouse). Also, history proves that the rich are hardly affected by tax raises because in the 1960’s, the top income rate was 90% where the economy was largely successful and the top 1% were not hurt by this either (Blodget). Furthermore, modern day tax rates are extremely low compared to the past rates, including times of an economic boom (Blodget). Those who wish to keep taxes at their current rates are the ones who benefit from it as they wish to keep all the money for themselves instead of using their taxes to help out the poor and help them gain the incentive and skills in order to have a sufficient
“For example, a person making $100,000 in a year might pay 25% of their income in taxes ($25,000 in taxes), while someone with an income of $30,000 might only pay a 10% tax rate ($3,000 in taxes)” (Roach, Brian). Mostly, taxpayers are put down into groups based on their taxable income such as: the more one earns and the more taxes they will have to pay once they cross the standard cut off points between the different tax bracket levels. The progressive tax is also a method that directs economic inequalities in a society. To evaluate a tax system’s influence on inequality, one must consider both the distribution of taxes paid and the distribution of the benefits derived from tax income. If the profits of programs funded by taxation mainly benefit poor families while high-income households pays for most of the taxes, then the tax system effectively functions as a transfer mechanism. Making the progressive system increase or changing the distribution of benefits allows better redistribution of economic wealth. A progressive tax system may yield a given level of public revenue with the least economic
After analyzing the data and the theory, we have provided our conclusion weather tax cut is better for the stimulation of growth or Government spending is? This report explains the big macroeconomic debates of the present times. It seeks to explore the debate within fiscal policy itself between tax cuts and government spending. We have tried to explain the argument through some theories and through some data collected from Indian econ...
Taxation is a compulsory levy imposed on the income, value of goods and services of individuals, partners and companies by the government. It is can be said to be an approach of imposing tax on the citizen. This imposition of tax, is expected to yield income which should be utilized in the provision of both basic and substantial infrastructural amenities, both social and security, as well as creates conditions for the economic well-being of the society at large.
The government use of taxes plays a crucial role in today’s economy as well as personal finances, it has and will continue to leave its mark on the world we live in.
...ot let this inequality gap continues to rise; therefore, the government needs to tax heavily onto the rich people, and redistribute their money to the poor.
Ricardo, D. (2013). The Principles of Political Economy and Taxation . Retrieved November 27, 2013, from http://socserv2.socsci.mcmaster.ca: http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/ricardo/prin/index.html
Incentives given should not result to loss in revenues; otherwise it will not make a perfect sense. The problem regarding the complicated tax system in our country may be analyze and change considering that according to the 1987 constitution, “The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. (Article VI, Section 28, Paragraph 1). The system should consider every possible situation and factors for a more collective way of taxation; this will be reflected on the concepts of good governance and division of labors in the bureaucracy.
In conclusion, when designing a tax system, we have to consider social and economic tradeoffs. Regulators should first maximize public interest under those limitations. There is no absolute fair tax system. A “successful” tax system will be improved with the test of time and modifications.