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...
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...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
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Lambro, Donald. "Rich Shoulder Tax Burden." Stow City Journal 8.1 (1995): 1. Print.
...e, Maxime, and Giuseppe C. Ruggeri. "Flat Taxes And Distributional Justice." Review Of Social Economy 56.3 (1998): 277-294. Business Source Premier. Web. 19 Jan. 2014.
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
In the United States there are four social classes : the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. This inequality can be seen in the incomes that the two classes earn. During the period 1979 through the present , the growth in income has disproportionately grown.The bottom sixty percent of the US population actually saw their real income decrease in 1990 dollars. The next 20% saw medium gains. The top twenty percent saw their income increase 18%. The wealthiest one percent saw their incomes rise drastically over 80%. As reported in the 1997 Center on Budget's analysis , the wealthiest one percent of Americans ( 2.6 million people) received as much after-tax income in 1994 as the bottom 35 percent of the population combined (88 million people). But in 1977 the bottom 35 percent had about twice as much after tax income as the top one percent. These statistics further show the disproportional income growth among the social classes. The gr...
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
Reich, Robert. "Why the Rich Are Getting Richer and the Poor Poorer." Mountain View College Reader. Neuleib, Janice. Cain S., Kathleen. Ruffus, Stephen. Boston: 501 Boylston Street, Suite 900. 2013 Print.
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.
The effect that the rich have in policies is enormous and has been discussed in
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.
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...
...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.
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.
“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
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.
As the supreme ruler of my own country, I need to raise $60,000 in taxes from three households. It is necessary to design a fair and effective tax system to raise money based on their family and income conditions. Next, I will explain the criteria and key design elements of the tax system in my country. Last, I will compare the designed tax system with the U.S. tax system.