True, in this pluralistic world we can’t fully redefine the economy, but we can establish economic policies. Nevertheless, to ensure justice prevails, there needs to be a striking balance for all citizens. How else are the wealthy going to be taxed in this respect? More than a quarter of all government taxes are directly paid by the richest citizens, but they are the smallest group. This means that if they proceed with President_x0092_s Obama motion of raising taxes to those earning more than $250,000, people will be discouraged to make more for a living. More of their money would be going to the government while they become unable to maintain their businesses. In turn, they will find it difficult even to pay their employees.
Ideally, the rich cannot fall with an increase in tax. Having a share of their income to help the economy is not discouraging to an open-minded citizen. Furthermore, money raised from taxation will, in turn, contribute to stabilizing a society for them to earn more. The economy needs to recover but cannot recover if a particular group lag behind.
In fiscal management, once taxes are progressive with the rate of income, the increasing national income will be automatically slowed down (Stiglitz, 2014). As it is, income inequality can indeed hurt the economy. Taxation brings distortions but has to be applied with equity in tax burdens.
Realistically, tax equity does not mean a complete balance between the rich and the poor but rather to produce the smallest possible distortions in an economy (Thoma, 2015). In other words, increase taxations on the wealthy group with slow down economic growth, but the reward is tremendously encouraging. In fact, such type of a taxation system will enhance economic growth by reducing inequality. Indeed, a balance between the privileges of the poor and rich will be the very foundation to reducing the capitalist system where money is power.
Stiglitz, J. E. (2014). Reforming taxation to promote growth and equity. Roosevelt Institute, White Paper. Retrieved from http://www.aimcmp.com/Stiglitz_Reforming_Taxation_White_Paper_Roosevelt_Institute.pdf
Thoma, M. (2015). Taxing the Wealthy Promotes Economic Growth. The Fiscal Times. Retrieved from http://www.thefiscaltimes.com/Columns/2015/01/27/Taxing-Wealthy-Promotes-Economic-Growth