homework for Alvin only

The tax system has been the center of heated debates, and different propositions have been forwarded by the legislative representative and the people over this issue. Some people argue that the taxes should be increased on the wealthy, i.e., people earning above $250,000 and another representative of an alternative proposition contends that these are the most productive people and the taxes will restrict their economic activity and will result in a decrease in taxes. The two proposals are, therefore:

1. Taxes on the riches should be increased even more

2. Taxes on the riches should be gradually decreased

The taxes are implied in the form of marginal rates; slabs are made of the taxable income, and each tax slab is charged at the specified rate given by the Internal Revenue Service, these slabs are charged at increasing rates and the rates increases as the tax slabs increased with more taxable income.

Thesis Statement

The increase in taxes will encourage or discourage the social and economic benefits to the society at large.

History and Status of the Issue

Although the marginal rates of taxes have fallen in the last 30 years, the contribution made by top 1% earners has increased from 18% to 37%. The taxes were decreased on riches in 1981 as Economic Recovery Act as a decrease in marginal tax rates after the Second World War. The marginal tax rates were increased after the Second World War, but to get the competitive economic targets, these were decreased.

Source (IRS, 2013)

The tax table above shows the position of the taxes that are applied on the limited incomes. The above table has been divided on the four slabs. The incomes have been represented by the interval of $50,000. The first slab represents the middle-income earners, i.e., $100,000-$183,250, whereas the second slabs represent the people between the middle class and upper class, and people with the income starting from $250,000 are considered wealthy or upper-class people.

First Proposition

The first problem is the increase in taxes on riches. The riches in the present time are becoming wealthier, the divide in the classes is increasing, and the hourly wages have not been raised concerning inflation in the past ten years, but the number of riches has skyrocketed. There has been a mutual consent over the fair tax system; however, people regard the tax system targeted on three persons, myself, yourself, and the third person; there have been heating debates over the issue, and the aspects whether who should shoulder the tax burden have been questionable. Usually, the benefit principle is proposed, and this rule is based on the idea that one should pay more taxes on more benefits (Mankiw, 2014). The gasoline tax is applied on those who use the roads.

The government's costs incurred on policing and patrolling to safeguard the assets of people. The wealthy will have more assets, and more charges incurred by the government on this. Therefore, the idea that there should be more taxes on the rich have reasonable grounds of just and equitable distribution of the tax burden. The implication of tax is not a communist view of equal distribution of income among people regardless of their competitive niche and tax system as the reflection of this proposition, but this is rather based on a just and equitable grounds. The amount of progressive taxation is a matter of debate, in the US; there is a moderate, gradual increase in taxes with income as compared to that of the France where 70% of the taxes applied on the riches.

Second Proposition

The other view is that top 1% receives 19% of income, and top 40% pay 99% of the tax (Bardes, Shelley, & Schmidt, 2011). The increase in tax would be like killing the geese that lay golden eggs, the incomes will be impaired, and tax revenue will be affected with this prospect. The top earners have paid more to be earned on the country’s infrastructure as compared to the average earners, and it has resulted in the social benefit to the average income earners also.

The capitalist system is based on the competition-based market; therefore, the productive people get most of the benefit, and these are the people that contribute most of the tax revenue; therefore, this proposition has also the evidenced-based facts in support of the view.

Conclusion

The marginal tax rates have been proposed on the ground of an increase in taxes or decrease in taxes. Two propositions were forwarded in the paper; first represented the increase in taxes, and second reassured the continual of the policy of gradually decreasing marginal tax rates. The decrease in marginal tax rates represents the status-quo of present tax policy, whereas the increase in marginal taxes will be the oppositional view of the present political policy of US government. Debates have been carried out by the legislative representatives over the issues, but the decrease in marginal tax rates has represented the second proposition that has been carried out in the present time.

References Bardes, B., Shelley, M., & Schmidt, S. (2011). American Government and Politics Today: Essentials 2011 - 2012 Edition. Cengage Learning. IRS. (2013). 2013 Tax Table. Retrieved , from http://www.irs.gov: http://www.irs.gov/pub/irs-pdf/i1040tt.pdf Mankiw, N. (2014). Principles of Economics. Cengage Learning.

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