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Regressive vs progressive taxes
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Regressive tax is a tax that is applied uniformly, yet takes a larger percentage of low-income individual 's income and lower percentage of individuals with higher income. Taxes that are regressive include taxes such as gasoline tax and sales tax applied to essentials. If sales tax is a uniform 7% individuals with less income spend a higher percentage of their total income on the tax than individuals with a higher income. Progressive tax is the opposite of the regressive tax. Progressive tax is income tax that takes a higher percentage of the overall income from individuals with high-income than low-income individuals. Progressive tax is used to fund social welfare programs that provide assistance to low-income individuals to assist with meeting …show more content…
The progressive tax strategy makes sense. It would not make a lot of sense to have low-income individuals paying the same amount of taxes that higher-income individuals do to fund safety nets that many of those same low-income individuals use to meet their basic needs. Higher taxes on low-income families would in turn cause the low-income families to need to use more safety net programs. It is easy to see how the regressive tax strategy makes it difficult on low-income individuals to due to a higher percent of their income being used to pay things such as sales tax. There does not appear to be a way around this due to everyone in every stated being expected to pay the same rate of sales tax. The general tax revenue is needed to provide states and local governments to provide all the services that the residence need, use, and expect. It is not unusual to hear individuals complain that their property taxes increased to provide funding for local schools or funds to improve the road ways. If the local government did not provide free public education or improve the road ways individuals would be upset to lose the services that they are accustomed to …show more content…
There is a fear that after the baby boomers receive their social security there will not be enough social security funds to pay the following generations. The extremely high increase in medical care is also impacting the Medicaid and Medicare funds. There needs to be a focus on reducing the cost of medical care in the United States. It comes down to the prices of everything is increasing causing the cost of all the programs to increase using funds more rapidly than the taxes can cover. In addition to price increases, the population is also increasing. With more individuals and families using these programs there is a need for increased funding that tax payers do not typically want to pay. A closer examination of the Indiana TANF program reveals that a family of 4 with absolutely no other income is provided with $315 a month for children and $346 a month for the parent or caretaker. I can’t imagine having to pay the bills and provide for a family of 4 on a monthly income of $661 (State of Indiana, 2015). Is a family of 4 honestly able to meet the basic needs of shelter, clothing, and heat on an income this low? Should higher-income individuals contribute by paying higher taxes? I would say that the TANF program should decrease the 60 month time limit that families can
There have been numerous debates within the last decade over what needs to be done about welfare and what is the best welfare reform plan. In the mid-1990s the TANF, Temporary Assistance for Needy Families, Act was proposed under the Clinton administration. This plan was not received well since it had put a five year lifetime limit on receiving welfare and did not supply the necessary accommodations to help people in poverty follow this guideline. Under the impression that people could easily have found a job and worked their way out of poverty in five years, the plan was passed in 1996 and people in poverty were immediately forced to start looking for jobs. When the TANF Act was up for renewal earlier this year, the Bush administration carefully looked at what the TANF Act had done for the poverty stricken. Bush realized that, in his opinion, the plan had been successful and should stay in effect with some minor tweaking. Bush proposed a similar plan which kept the five year welfare restriction in place but did raise the budgeted amount of money to be placed towards childcare and food stamps. Both the TANF Act and Bush's revised bill have caused a huge controversy between liberal and conservative activists. The liberals feel that it is cruel to put people in a situation where they can no longer receive help from the government since so many people can not simply go out and get a job and work their way out of poverty. They feel if finding a job was that easy, most people would have already worked their way out of poverty. The conservatives feel that the plans, such as the TANF Act, are a surefire way to lower poverty levels and unemployment rates as well as decrease the amount o...
Many debates have been waged over the decades on what will be taxed, on who shall be taxed and how taxes are collected. Since the 16th Amendment was ratified in 1913, the debate has intensified, centering on how high to make the income tax rate. Most Americans were not concerned since the Amendment was sold to them as something that would only affect corporations and the rich. With ever increasing fervor these corporations created lobbyists to convince Congress to exempt them from some or all of the income tax. The big breakthrough in this was taxing the worker directly with payroll taxes during World War II. This method of collecting income tax was sold to Americans as temporary, but Congress has extended it indefinitely and the public has become used to it. The next few decades saw the debate revolve around creating tax breaks for individuals in an attempt to modify behavior or spending. This has resulted in over 67,000 pages of tax code and an entire industry devoted to tax compliance and evasion, with the unintended behavioral change of corporations and the rich parking their money outside of the United States in small island nations to avoid taxation. These offshore accounts are estimated to hold $10 trillion dollars, a number approximate to the national debt. The FairTax Act should be enacted because it eliminates all federal income taxes for individuals and corporations, eliminates all federal payroll withholding taxes, abolishes estate and capital gains taxes and repeals the 16th Amendment; thus eliminating the need for offshore accounts.
I know that one of the benefit of our current income tax system is those who make a lower income will have to pay a lower tax percentage from their earnings. However, the disadvantages with this method is quite obvious. According to the Internal Revenue Service (IRS), the charts show that it has six federal income tax brackets between 10 to 35 percent, which means that our progressive tax system affects hard working people with a higher tax rate (Freedomworks.org). For example, people who earned an income up to $8,400 would be under the 10% tax bracket, while people earning about $360,000 or more would fall under the 35% tax bracket (Rosen, Elizabeth). The taxpayers are broken down into groups based on their taxable income. The more a person earns, then the more taxes they will have to pay once they reach the different taxes bracket levels
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
Texas is one of the seven states that have no state income tax. This means the state does not impose an additional state income taxes on someone’s earnings, but there is still a federal income tax. While many claim this is beneficial to all of Texas citizens and promotes population growth others find it disadvantaging. Their is many disadvantages and advantages to not having a state income tax.
Elderly people, as a whole, use up much of the nation's healthcare budget; six times as much money is spent by the federal government on health services for those over 65 than those under 18 (Callahan, 1997). More people are entering into this age group than are dying due to medical advances that can now prolong life for years, using up hundreds of thousands of dollars on one feeble life that could possibly help hundreds of younger people and thereby prevent future health expenses (Caplan, 1987). America's healthcare budget is not large enough to support every patient adequately- instead of a few getting sufficient healthcare, many are merely getting a half-way supported (Callahan, 1997). With so many last- ditch efforts available, th...
...m in long overdue for a revision. In the future, there are several aspects that need to be addressed. Those are 1) How to make the TANF Program more of an effective safety net for needy families, 2) How to make TANF a more effective working program through training and and education, 3) How to better target state and federal funds, and 4) How to strengthen federal funding and contingency funds, which the ACA aims to do. ⁴ The Affordable Care Act (ACA) will likely impact this program in many ways. It will provide opportunities for TANF to become a more efficient program, by changing income and eligibility requirements. The ACA will expand medicaid in most states, allowing more funding to go towards programs such as TANF. The ACA will also provide more education and training for TANF recipients through programs such as Health Profession Opportunity Grants (HPOG).¹
There are many elements affecting increases in health care costs. The proportion of old people in the US population increases and aging population can raise health care expenditures. Because, compared to younger people, older people use more health care services as they are more likely to have non-communicable diseases. Non-communicable diseases are not caused by infection and they cannot spread among people such as, heart disease, asthma, diabetes, and cancer. Health care costs for non-communicable diseases is expensive and these diseases continue for a long period of time which shows that health care expenditures will rise due to aging of population.
The two major components of Medicare, the Hospital Insurance Program (Part A of Medicare) and the supplementary Medical Insurance program (Part B) may be exhausted by the year 2025, another sad fact of the Medicare situation at hand (“Medicare’s Future”). The burden brought about by the unfair dealings of HMO’s is having an adverse affect on the Medicare system. With the incredibly large burden brought about by the large amount of patients that Medicare is handed, it is becoming increasingly difficult to fund the system in the way that is necessary for it to function effectively. Most elderly people over the age of 65 are eligible for Medicare, but for a quite disturbing reason they are not able to reap the benefits of the taxes they have paid. Medicare is a national health plan covering 40 mi...
There are three issues when it comes to the health care cost rising. The first is the rising cost in prescription drugs. The second area of rising cost is the increased technologies when it comes to the medical industry. The third problem is the aging population. Prescription drugs are the area of the fastest growing health care expense, and it is projected to grow at 20 to 30 percent each year over the next several years. There are many newer, more expensive drugs on the market, and the use of these prescriptions is exploding. In addition, with so much television advertising, many consumers ask their doctors for expensive, brand name drugs when there may actually be a generic drug that works just as well.
The U.S. population is getting older: the Census Bureau reported the population of people less than 45 years old dropped from 65.6% in 2000 to 60.5% in 2010. While the percent of people 65 years and over increased by 15% between 2000 and 2010 (US Census, 2011, p.2). Age is associated with increased health care demand. Over 56% of people 65+ and 65% of people 75+ make four or more visits to health care professionals. While only 31% of people 18-44 years old make four or more visits (US Census, 2012, table 166). In 2000, people over 65 years old visited the hospitals three times more than the general population, and people over 75 years old visited the hospitals four times more than the general population (Center for Disease Control and Prevention, 2003, p.8). Therefore, due to the fact that ageing population brings about an increasing demand for health care, With the population getting older and thus increasing demand for health care, the US needs to increase the supply of health care professionals.
This will cause Medicare to go bankrupt in the near future. There are only two main approaches that can be taken to slow the health care cost growth. We can reduce spending on high-cost medical care that produces little to no benefits to the patient, or we can reduce spending on the high cost care that produces some benefits, but at an even greater increase in cost. Either of these solutions would cause some rationing and very important but difficult decision making to
The current tax system that the United States uses contains several flaws. First of all, it is very complex. It is comprised of many various variables that can create loopholes. These loopholes can cause two equal income families to be paying very different tax rates. In fact, there are 480 different types of tax forms (Website). The current tax system is also very unfair for the wealthy. Because it is a progressive tax, it is higher for people who have higher incomes. People should not be punished for being successful. If a flat tax policy were instituted, then it would simplify the complicated tax system, create fairness within the economy, and promote a desire to thrive financially.
The cost of insurance has increased dramatically over the past decade, far surpassing the general rate of inflation in most years. Between 1989 and 1996, the average amount an employee had to contribute for family coverage jumped from $935 to $1778. In 1990, American companies spent $177 billion on health benefits for workers and their dependents; that number rose to $252 billion by 1996, or more than double the rate of inflation. Among the cost drivers: an aging population – the number of senior citizens who need health benefits is increasing dramatically every year; medical technology advances – which decreased the death rate; new drugs – expensive and effective, which make us live longer; and of course the increase of fear in medical litigations among doctors. Increase in usage will surely increase the cost of health care. On average, between the ages of 45 and 65, a person’s usage of health care triples. Eighty year-olds use nine times more health care services than 45 year-olds. By the year 2030, the number of people over 65 is expected to double. The cost for medical services have increased as well. Since 1980, medical cost have risen 281%. The number of organ transplants has doubled in the past 15 years, and all transplants cost over $100,000.
...ajority of total spending (Henderson).” Physicians have been accused of creating a greater demand, which push up costs. Physicians are able to increase the demand by referring patient to other specialist. Rising incomes affect the demand in an increasing manor on the macro level. This is the characteristic of a luxury good. Is medical care a luxury? The elasticity of the demand function becomes more inelastic when your income rises creating a moral hazard. I believe that higher premiums should be charged to the wealthy to cover these increased expenses. “As medical care spending continues to escalate, the search for alternatives to slow its growth has focused on the supply side of the market. Modifying provider behavior is seen as the only way to control run-away spending. By ignoring the demand side of the market, we may be foregoing one of the most powerful forces available for cost-control, individual self-interest (Henderson p.149).” The most important aspect we need to get control of is the patient factors, which include health status, demographics and economic status. Educating the general public has proven to be an effective way of battling the rising costs of medical care!