Should We Tax the Rich More? The Pros and Cons
Should We Increase Taxes For the Wealthy?
Should we tax the rich more? There is an ongoing debate in the USA and across the world about how big the tax contribution of the wealthy should be and whether it should be increased.
As economic problems have intensified in recent years, so has the debate. The people on the left of politics generally want higher taxes for the wealthy, insisting that they can easily afford to make a larger contribution. Whereas people on the political right generally argue that increasing taxes for higher earners is counterproductive and may actually worsen many of the problems that it is supposed to solve.
Below, I have laid out what I believe to be the main pros and cons of the argument that we should tax the rich more.
Why is it that if you take advantage of a corporate tax break you're a smart businessman, but if you take advantage of something so you don't go hungry, you're a moocher?— Jon Stewart
6 Reasons Why We SHOULD Tax The Rich More
- When economic times are tough, the government needs to look at ways of bringing in more money. Increasing taxes on the wealthy makes sense, as they are the ones who are most able to afford tax increases.
- A progressive tax system can prevent wealth discrepancies from getting too large. When the gap between rich and poor gets beyond a certain point, there is an increased risk of social instability and strife, such as crime and political turmoil. Big differences in wealth are also seen by many economists as one of the factors that led to the Wall Street Crash in 1929.
- Taxing the rich can also be justified on moral grounds, if it is used as a form of wealth redistribution, with the tax money raised being used to aid the poorest sections of the population.
- Countries such as Australia, Sweden and Canada all do well in terms of economic growth, despite them having high taxes.
- Since the 1970s, the income of the wealthiest members of society has increased dramatically, while the income levels for the rest of society have barely moved in real terms, which means that adjustments need to be made.
- Money is needed to pay for defense, health, education, social security, etc and it has to come from somewhere.
We don't need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system. And then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again.— Marco Rubio
6 Reasons Why The Rich SHOULD NOT Pay More Tax
- Governments already waste much of the money that they collect. If taxes are increased, all that will happen is that the government will just have more money to waste and there will be no incentive for them to spend efficiently.
- Raising taxes acts as a disincentive for individuals and businesses to make money. Some of the most talented people and businesses will leave the country and find somewhere with lower taxes, if they feel that their efforts are not being rewarded sufficiently.
- There is no public appetite for adopting higher taxes and the high taxation rates that were used in the past are now seen as a failure. High taxes in the past slowed the economy and lead towards stagnation.
- Cutting taxes for business has been shown on numerous occasions to actually increase overall revenue. Increasing taxes, on the other hand, just makes businesses alter their investment, spending and tax behaviors in order to find ways of cutting their tax expenditure, which generally leads to an overall decrease in revenue for the government.
- Higher taxes inevitably lead to a reduction in investment, as the people most likely to invest have their money supply hit. If there is less investment, then there are less businesses and unemployment increases. With more people out of work, there is less money being spent and the economy goes into a downward spiral.
- Increasing taxes for the wealthiest is socially divisive and encourages a class war situation where the poor and middle class begin to resent the rich, and the rich, who find themselves paying an increasing share of the tax bill, resent the poor and the middle class in return.
What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.— Mark Twain
A Brief History of Taxes in the US
- The American Revolution is kick started by a rebellion against British taxation policy in the 1760s.
- The newly independent US collects taxes on imports ("tariffs"), whiskey, and (for a time) on glass windows.
- States and localities introduce a poll tax, which applies to voters, and a tax on property.
- State and federal inheritance taxes start after 1900.
- States impose sales taxes in the 1930s.
- Income taxes are imposed temporarily during the Civil War, but it is not until 1913 that they are brought in on an indefinite basis.
We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.— Winston Churchill
Should we tax the rich more?
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
Questions & Answers
Can higher taxes contribute to a fairer society?
Proponents argue that progressive taxes are an effective method for redistributing wealth and creating a fairer society through reducing financial disparities. Opponents argue that higher taxes unfairly penalize earners, act as a disincentive, and reduce the amount of money that businesses can reinvest.Helpful 47
© 2011 Paul Goodman