Taxes on the wealthy should be higher essay:
There is a debate among some circles about what obligation if any the wealth have to help in improving the economy for everyone else with respect to tax contributions. Some argue that tax cuts for the rich help them to create more jobs and to innovate through their businesses in the economy. However, an analysis of the present economic environment reveals the problem with this concept. The current tax rate in the United States is significantly lower than it was during the 1940s and 1950s however, contrary to the arguments that the reduction in tax rates would bring about economic growth, analysis has found that this has not really been the case, rather the lower tax rates have resulted in serious wealth disparities in the United States with the top .1% of people controlling significantly more of the country’s wealth (Hungerford, 2012). Based on these figures, tax cuts on the wealthy do not benefit the larger economy and therefore taxes should be increased. The wealthy have an obligation to help other people in their country because they did not become wealthy on their own. This can be accomplished by charging wealthy people higher taxes which will stimulate employment, increase business investment and create a better economic environment for the entire region.
Wealthy people became wealthy because of the larger economy and they have a responsibility to give back to the community that made them wealthy In the first place, although very rich people are much fewer in number than working or middle also, they make up a much larger proportion of the tax base. Wealthy people make up a very sizeable proportion of the tax base. Even in 1993, a small group of executives at the top can have the equivalent tax effect of the next one million people with one person even counting for as much as 2% of the change in rates (Goolsbee, 1997). There is evidence to show that the current tax system favored by the United States which Canada may follow is actually more beneficial for rich people that it is for poor people. According to Niman (2011), the tax system favors the wealthy by giving the many benefits and incentives such as tax free loans and bailouts which are not available to the poor, working and middle class. The unfairness of this system is become very apparent with growing income equality within the developed world. Even when the government takes steps to try to get wealthy people to pay more in taxes they avoid it so that they do not pay as much One of the reasons that high income people might be able to save more of their income is because they get more of their money from investments and self-employment which gives them the ability to hide this money from tax collection services (Feenberg & Poterba, 1993). This suggests that government needs to take strong steps to collect taxes from the few wealthy people who are putting more of their tax burdens onto the poor.
Taxing wealthy people more than anyone else:
Wealthy people need to be taxed more than anyone else because it helps to increase employment while cutting taxes does not help employment and actually harms future job prospects. At present, although companies argue that they need more tax cuts because they are job creators and taxation prevents them from hiring more workers due to pressure on their profit margins, in reality companies are actually taking much more out of the economy than they are paying back in employment. For example, between 1983 and 1999, the profits of the largest firms grew about 362.4%, the number of actual people employed only grew about 14.4%. This is because companies are actively keeping their labor costs down by hiring contractors and staying very flexible (Anderson & Cavanagh, 2000).Charging wealthy people higher taxes makes sense because it prevents them from hoarding money that could go into business investments and increasing employment. When taxes on corporate income is low, there is an incentive to hoard it instead of spending the money or investing it to start a business. This has been seen throughout the industry where CEOs and upper management prefer to spend the money on their own salaries rather than expanding their businesses or hiring new employees (Weaver & Fry, 2012).One of the most important ways for people to gain employment in the modern knowledge based economy is through education, however cutting taxes on the wealthy destroys the state’s ability to provide education for its people. Kansas provides an example of what happens when states cut taxes very deeply. The state cut taxes on the wealthy and as a result its schools are seeing t significant decline in educational funding compared to pre-recession levels, Cuts would have been even deeper had the state not drawn upon increased taxes on the working class to provide funding for the schools. These cuts ultimately did not increase job production but did cut school funding (Leachman & Mai, 2014). Therefore cutting taxes for the wealthy in order to produce more jobs is mistake.
Higher taxes for wealthy people:
Wealthy people need to have higher taxes because it leads to more investment in business and improves the health and structure of the economy. Small businesses are the backbone of the economy in both the United States and Canada because of the benefits that they bring in terms of increased employment and innovation. Therefore more small businesses are an important part of the economy. One of the effects of increasing the tax rate is that it increases the percentage of people who are self-employed (Schuetze, 2000). This effect is because the higher tax rate gives people an incentive to invest their money instead of attempting to hoard it. Taxing wealthy people means that the money from taxation can be used to increase the strength of the economy and even possibly prevent it from being weakened by unhealthy activities. By rerouting money from the wealthy to social programs and assisting the poor and the middle class, they will not be able to spend this money on the same kind of financial betting that led to the financial crash that was bad for the entire economy (Judis, 2012). By rerouting money from the wealthy into the economy it generates growth and prosperity for the economy as whole. Evidence from the historical record and from foreign countries show that higher taxes can increase a country’s growth because it allows for the nation to make greater investments in infrastructure and education which strengthen the middle class (Reich, 2012). This is important because a healthy middle class is the engine of the economy.
In conclusion, the argument that increasing taxes on the rich harms the economy has proven to be largely false. Historical and statistical evidence shows that when taxes are cut on the wealthy it does not lead to greater employment numbers. Therefore it is the obligation of the wealthy to give back to the economy that allowed them to become rich in the first place because they contribute so much more than the average person. Taxing the wealthy is associated with greater employment prospects because more money is diverted to business growth , expansion, education and infrastructure and less money is spent on financial speculation and wealth hoarding
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