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Economic inequality in America
Income and wealth inequality sociology
The gap between poverty and riches
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Filing income taxes is something all working Americans do, rich or poor; however, the amount paid isn’t what most would expect. Besides the obvious ways of reducing taxable income, such as decreasing the amount of withholdings, reducing increasing deductions, and taking advantage of tax credits, those who are determined to save, generally the upper class, find other ways (Perez). These ways may include investing, putting money into savings, or switching account types. This is what allows the rich to keep getting richer and prevents the poor from getting significantly better.
Taxes are the government’s main source of revenue, with roughly 47% of the tax revenue coming from income tax (Griffith and Schwabish). Because of this high percentage, as well as the strain caused from the extensive filing process, this is an important issue today. If nothing is done about the variable rate income tax, the middle and lower class Americans will continue to pay more than their fair share in taxes and the upper class will continue to pay well below their fair share. This will create a bigger gap between the classes. This is such an important issue to me because I come from a middle class American family that would like to pay less in taxes, and I believe in equality for all. The underlying problem of this issue is that Congress doesn’t vote based on what the majority of its constituents want, but rather what makes the congressmen the most money. They are more concerned with pleasing big business America and the wealthy than taking care of middle and lower class America.
How taxes are imposed is of major importance to all Americans. Reforming the tax code to implement a flat tax is often offered as a solution to tax inequity. The ...
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...ovember 2011. The New York Times. 11 January 2014.
FreedomWorks. FreedomWorks. n.d. 11 January 2014. .
Griffith, Courtney and Jonathan Schwabish. Budget Infographic - Revenues. 17 April 2012. 11 January 2014. .
Irons, John. US News: Cutting Taxes for the Rich Never Ends Well. 1 November 2011. 11 January 2014. .
Marshall, Collin. Turning Point USA: Flat Tax. 27 February 2013. 11 January 2014. .
Miller, Emily. "The Washington Times: MILLER: Flat tax to the rescue." 20 October 2011. The Washington Times. 11 January 2014.
Perez, William. About.com Tax Planning Basics. n.d. 11 January 2014. .
Though ‘Reaganomics’ was successful both at controlling “stagflation” and promoting economic growth, it has and always will be an extremely controversial topic regarding the redistribution of wealth. Immediately after being sworn into office, Reagan implemented the first of many tax cuts. The Economic Recovery Tax Act passed in 1981 took 20% off taxes from top income levels and 25% off taxes from all lower income levels. Additional tax cuts, enforced in 1986, lowered taxes for those with high incomes by another 28% and those with lower incomes by 15%. These cuts were enacted based on the principle that tax breaks for the upper echelon of society would encourage investment and spending, creating new jobs for lower income individuals.
Teslik, Lee. "Backgrounder: The U.S. Economic Stimulus Plan." The New York Times, January 27, 2009.
Whether or not to keep or discard the Bush era tax cuts for the wealthy, give tax breaks to the lowest tax bracket, and even throwing out the entire current tax code and replacing it with a simpler version, tax code and tax law has been a very controversial topic for the past few years. As it stands, the current tax code has over seventy two thousand pages, compared to the four hundred pages it had in 1913. There are many different stakeholders in this debate including taxpayers, corporations, businesses, etc. Americans for Tax Reform (ATR) is an organization that was “founded in 1985 by Grover Norquist at the request of President Reagan”(.N.p.). Their goal is to create and advocate for a simple flat tax,“...on the belief that they will provide a strong stimulus to investment, employment, and output” (Stokey 1). They promote their organization and represent taxpayers in all fifty states. Along with tax reform, ATR also advocates for individual health care, free trade, and spending transparency (.N.p.). Using very simple and easy to understand images, ATR is able to convey their goals and get information across to the general audience that visits their website.
Many argue that Reagan “enacted irresponsible tax giveaways for the rich…[starving] the federal government of revenue [which] led to unprecedented deficits.” There is no doubt that “today’s budget deficits [can] impoverish our descendants.”1
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.
Murray, Sara. “Numbers On Welfare See Sharp Increase.” The Wall Street Journal. 22 Jun. 2009. 20 May. 2012.
Hoffman, Kathy Barks. "Rick Snyder presents $45 billion budget; cuts to education, personal tax exemptions." Oakland Press, February 17, 2011: 1-3.
Many ponder the idea of federal taxes and whether the wealthy deserve to pay a higher percentage rate of their overall income. That is, they argue that because our society needs more equality and a lower national budget deficit, taxes on the rich must be raised. This specific topic has been discussed for decades, and due to the severely different perspectives, it is unclear whether the two sides will ever come to an agreement. President Barack Obama and much of the Democratic Party strongly lean towards raising taxes on the rich, while the conservatives and the Republican Party heavily lean towards a more balanced flat tax. However, after extensive research and focus on what would be best for the equality of individuals, the nation and its economy, this paper will firmly prove that the top one percent should not be taxed any more than they are today.
McManus, Doyle. “Drawing Budget Battle Lines.” Editorial. Los Angeles Times. Los Angeles Times, 14 Apr. 2011. Web. 5 June 2011. .
Eliminating the confusion of distributing all of the taxes throughout the country would be in our government's vital interest. Every two weeks I will go through the exact same ritual, I will receive my paycheck and furiously tare it open to see how much money I will be able to lose in the next two weeks. I'm always blessed with a beautiful number at the top that is very fair and deserving for the hard work that I do on the weekly basis. Then I always see a whole bunch of abbreviations, different dollar amounts, then the number at the bottom that always seems to depr...
The United States tax system is in complete disarray. Republicans and Democrats agree that the current tax code is complex, unfair, and costly. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms (Armey 1). The main reason the tax system is so complex is because of the special preferences such as deductions and tax credits. Complexity in the current tax system forces Americans to spend 5.4 billion hours complying with the tax code, which is more time than it takes to manufacture every car, truck and van produced in the United States (Armey 1). Time is not the only thing that is lost with the current tax system; Americans also lose great deal of money complying with the tax code. Resources that are currently wasted on record keeping, filing forms, learning the tax code, litigation, and tax avoidance. The cost of complying with the current tax code totals about $200 billion annually, or $700 for every man, woman, and child in America (Armey 1). The overwhelming consensus that the current tax system is inadequate has ignited the search for tax reform. There are numerous proposals for tax reform; one particular proposal brought forth by various conservatives is the idea of national flat rate income tax. The idea is to replace the current income tax with a single rate that everyone pays.
Wheelan, C. (2011). Introduction to Public Policy (1st ed.). United States: W.W. Nortion & Company, INC. (Original work published 2011).
... middle of paper ... ... “a poll tax by another name.” nytimes.
Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...
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.