Taxes and Tax Responsibilities
Taxes are the lifeblood of the majority of countries. However, one of the most frequently discussed issues has been how tax responsibilities should be distributed among those with varying financial capacities. Most academics have written both in favor of and against the same.
The Role of Taxation in Generating Revenue
Most economies are currently in a period where they must cut back on their debt obligations. Taxation is one of the best methods for economies to generate revenue. The question of how the economies can raise the quantity of tax revenue they receive remains given the raising necessary for loan repayments. Some people argue that the rich should pay more tax more to meet this demand, while others are against the idea of the progressive taxation system. This essay will address arguments for and against progressive taxation and then conclude.
Arguments for High Tax Rates On The Rich
The only way in which economies can increase their revenue is by imposing high taxes on the super-rich citizens and residents, (Diamond, et al., 2011). Scholars claim that for countries to maintain services such as Social Security and Medicare make more investments in infrastructure, among others, they must increase the tax revenue. The easiest way to do so is by taxing the rich more than the poor and the middle class.Research has proved that there is a reduction of the middle-class group of people. The people who were middle-income earners in the past are now moving up to the rich group level or down to the poor level. The only way to maintain an impressive GDP is by increasing the taxes on the wealthy. The rich should, therefore, be taxed at a higher rate as compared to the poor,( Vickrey, 1947).
It is no hidden fact that most Economies in the world need more financial income to function properly, there is need also to recognize that most people cannot afford to pay higher rates of taxes. For instance, the largest number of Americans cannot afford it. It has been proved that ninety percent of Americans are earning only $280 more per year when compared with the income earned thirty years ago. Comparing the inflation rates and some loans that were required to be paid thirty years ago and in the present world, then there is more need for revenue in the current world. If the ninety percent group is asked to pay more tax, then it will be an unfair decision. Therefore, the best way is to raise the amount of taxes that the remaining ten percent is generating, (Piketty, 2014). Even if the share of national income has increased, the tax burden on the middle class has increased. This is because the rich have learned ways in which they can reduce the tax burden. The regular middle-class citizen pay taxes on almost every activity that they engage in. It is therefore; better to tax the rich at a higher rate than the poor and the middle class.
Arguments against High Tax Rates on the Rich
There is need to note that the advantages of equality in the society cannot be overlooked in today's society. Imposing high taxes on the rich increases inequality in among the citizens, hence making the social distance between the rich and the have-nots to be greater, (Sarte, 1997). A tax system that treats people equally demands that the tax burden should be similar to all the citizens. This means that the more a person earns should be the more the taxes that they pay. Equality does not call for same taxes but, calls for same tax burden, which promotes oneness in the society. A common feature in today's world is privation. Extreme cases of destitution, where people care less about how others are doing are a danger to the social cohesiveness. The equal tax burden on the citizens has a way of making citizens feel that they contribute to the economy in a similar manner, hence reducing privation. On the other hand, imposing a higher tax burden on the rich would make them feel like the controllers of the economies, hence promoting privation. A free society in which people get to choose what they want to do and how to spend their money is the dream of every citizen. The need for the social value of expenditures is a common characteristic of between the wealthy and the non-wealthy. Such moral codes play a great role in ensuring safety and oneness, (Heckman, et al., 1998).
People should be free to choose their satisfaction from their money through having the liberty to decide their expenses. This has different hierarchy of preferences, which should not be influenced by others, leave alone the government. Imposing unwanted high tax burdens on the rich will only worsen the social relationships between the wealthy and the have-nots. The government should ensure that there are equal opportunities, freedom, and satisfaction among its citizens.Morality demands that the government should treat all its citizens fairly; Imposing higher tax rates on the rich is a way of treating them unfairly. Bothe the rich and the poor utilize natural resources and public resources such as schools and infrastructure equally. They should contribute to a similar percentage in ensuring that the maintenance of public services and resources. Citizens should pay equal tax regardless of their financial positions, (Roberts, et al., 1994).
Conclusion
There are many views and arguments concerning whether the rich should pay less or more taxes than the middle class and the poor class. However, it important to note that the study did not find any scholarly articles supporting the idea of the rich paying less than the poor and the middle class. The study, therefore, put into consideration materials in support and against the issue of the rich paying more taxes, meaning that they should have higher tax burdens than the poor and the middle class. As displayed above, there are advantages and disadvantages accrued to higher tax burdens on the wealthy. With a consideration of both, this study concludes that the rich should not be taxed at higher rates than the poor and the middle class. The tax burden experienced should be equal among all citizens. The government uses most methods of trying to unite the citizens. However, if the social distance and the psychological distance between the citizens are not reduced, then the super-rich and the low-income earners will never be in good terms. No amount of guns and police supervisions that can unite a society the way social cohesiveness does. Hence the need for the citizens to be in solidarity irrespective of their financial status; this is a possibility when the tax burden is equal to all the citizens.
References
Diamond, P., & Saez, E. (2011). The case for a progressive tax: from basic research to policy
recommendations. The Journal of Economic Perspectives, 25(4), 165-190.
Heckman, J. J., Lochner, L., & Taber, C. (1998). Tax policy and human capital formation (No.
w6462). National Bureau of Economic Research.
Piketty, T. (2014). Capital in the 21st Century.
Roberts, M. L., Hite, P. A., & Bradley, C. F. (1994). Understanding attitudes toward progressive
taxation. Public Opinion Quarterly, 58(2), 165-190.
Sarte, P. D. G. (1997). Progressive taxation and income inequality in dynamic competitive
equilibrium. Journal of Public Economics, 66(1), 145-171.
Vickrey, W. S. (1947). Agenda for progressive taxation. The Ronald Press Company.
